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Cigna fined $2 million for violating NY self-funding law

An investigation found that Cigna illegally sold stop-loss insurance, which may only be sold to large group employers that self-fund underlying medical expenses.

By Josefa Velasquez | Updated on November 17, 2017
Between Jan. 1, 2016, and Jan. 1, 2017, Cigna violated state insurance law by issuing 43 fully insured health insurance policies and 38 stop-loss insurance policies outside the state. (Photo: Shutterstock)

Cigna Health and Life Insurance Co. was fined $2 million on Tuesday by New York’s Department of Financial Services for violating state insurance law.

An investigation by the department found that Connecticut-based Cigna illegally sold stop-loss insurance, which may only be sold to large group employers that self-fund underlying medical expenses in an effort to limit their liability in the event of an unexpected amount of claims. The investigation also found that Cigna illegally sold fully insured policies outside of the state to New York-based small groups with New York employees, which harmed the community-rating program, DFS said. New York mandates pure community rating, meaning that insurers aren’t able to charge more to older customers who are more likely to have a higher need for medical care.

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