Premium Cost Trends in Medical Stop Loss

Quantifying the Population Health Management InvestmentSelf-funding allows for greater control over an employee benefits plan, however the one thing that no employer, or employee, can control, are unexpected catastrophic health issues. Stop Loss insurance provides a level of protection for employers to offset the financial burden of large dollar claims. With the cost of health care rising faster than inflation, and the cost of specialty drugs reaching unprecedented levels, stop loss will continue to be a prudent investment to protect the long-term viability of self-funded health plans.

According to a recent survey by Aegis Risk, the frequency, and cost of catastrophic claims is on the rise. One in five survey respondents reported filing a stop loss claim in excess of $1 million over the past two policy years. The survey also indicated that decisions on stop loss policies, individual and aggregate thresholds, and policy types are being accomplished on a collective basis. Renewal decisions are being made by human resource directors, finance managers, and CFOs, who are reportedly involved 66 percent of the time. In addition, executive leaders are involved in stop loss decisions 45 percent of the time – a number that is increasing over the years.

Deductibles

When asked in 2015 if they anticipated an increase in their individual stop loss deductibles, the majority of respondents were uncertain:

  • No, prefer to keep at the current level 42%
  • Yes, will seek a moderate increase 8%
  • Uncertain, will review a range and make a determination 48%
  • None of the above 2%

Premiums

According to survey respondents, average monthly premiums by deductible and contract type ranged from approximately $12.00 to approximately $96.00

Individual Deductible

Paid

12/15

15/12

12/12

$100,000

$95.30

$93.43

$91.63

$75.63

$200,000

$43.31

$42.75

$41.93

$34.61

$300,000

$27.61

$27.07

$26.55

$21.91

$400,000

$19.96

$19.57

$19.19

$15.84

$500,000

$15.52

$15.22

$14.92

$12.31

Other insights of note from the survey were as follows:

  • 94% of surveyed plans cover pharmacy, demonstrating a slight increase compared to previous years
  • 94% of respondents do not have an annual stop-loss reimbursement maximum
  • 98% of policies offer unlimited lifetime maximums, representing at 13% increase from 2010
  • 27% of respondent policies include an aggregating specific deductible, with the average size being 54% of the underlying individual stop loss policy
  • 8% have considered a captive arrangement to further mitigate risk
  • 8% have considered dropping their stop loss policy entirely
  • 18% hold policies with at least one lasered claimant

Employers looking to reduce their annual stop loss premium costs should consider the following:

  • Partner with an experienced broker who can help you understand all of the variables that can impact your policy decision.
  • Confirm your broker has negotiated on your behalf and is marketing several options to ensure you are receiving the best policy options
  • Be sure your benefits administrator is accurately managing your claims disclosures to help avoid denials

For more information on strategic stop loss solutions, contact the benefits experts at POMCO today.