Because healthcare costs continue to rise along with frequently expensive claims, it’s imperative that self-funded employers have protective stop-loss insurance coverage. It’s also important that organizations have guidance to help them use benefits optimally. Here’s how stop-loss insurance protects you.
The Issue
Employers often eschew fully insured plans to avoid the fees and expenses associated with a carrier’s premium. The rub is that self-insuring can be a risky proposition if more claims are filed than expected. To lessen such risks, employers often turn to stop-loss coverage.
What is Stop-Loss Coverage?
Essentially, stop-loss coverage protects self-funded employers from catastrophic or unexpected losses. Such employers invest in the insurance because they don’t want to be totally liable for losses arising from their employee benefit plans. Stop-loss insurance, which 74 percent of self-funded companies have, shifts to the insurance carrier losses that exceed deductibles.
What Types of Stop-Loss Coverage Are There?
Most employers, save for the largest, buy both kinds of coverage, which include:
— Specific. This type basically shields you against a costly claim from any one employee.
— Aggregate. This type caps the total dollar amount of your aggregate liability during a contract period.
Note that there are several variations of both coverage types.
How Important is Stop-Loss Coverage?
Look at this Mercer statistic: Between 2016 and 2019, the number of employees with annual claims above $3 million doubled.
And no end is in sight.
So, to avoid catastrophic medical claims that could bankrupt your health plan, you need protection. And stop-loss insurance is a way for a self-funded employer to safeguard against expenses that exceed their ability to pay.
What Mercer Offers
Mercer offers both stop-loss coverage and the care guidance you need to use the benefits productively. Its comprehensive approach can help you hone the appropriate care and claims management strategy.
Specifically, Mercer provides:
— Comprehensive coverage terms. For protection beyond the current policy period, Mercer offers negotiated terms that includes multi-year rate limitations on the “lasering” of high-risk claimants from year to year. Lasering refers to a practice in which an employee is covered by a stop-loss policy at a higher deductible than other group members.
— Holistic review. Mercer looks at your overall situation before getting you coverage. Your existing insurance coverage will be reviewed, and Mercer will work to uncover gaps in coverage as well as terms and conditions.
— Clinical and operational performance assessments. Mercer will assess the performance of vendor partners and handle pricey claim irregularities. Such third-party evaluations set the stage for, ultimately, improved clinical and financial outcomes.
— Care management services. You want top-shelf care management for employees who have serious or chronic conditions and needs that are acute. Due to Mercer’s holistic approach, not only can you expect improvement in care quality and health outcomes, but you can also expect average savings per employee of $430 annually.
One intangible that Mercer offers is experience. You can trust that the firm knows the best policy options for you. In fact, its expert clinicians evaluate more than 90 companies annually. Mercer turns to a wide-ranging group of medical professionals to coordinate with audit and financial experts to help deliver the right care.
Has Mercer Been Successful?
Well, since 2009, Mercer’s involvement has resulted in more than $23 million in premium refunds to clients. That’s quite a lot if we say so.
Now that you know how stop-loss insurance protects you from large medical and pharmacy claims, you can put it in place along with the guidance you need to make the most of your coverage. Healthcare costs have been spiraling upward for some time. Take care not to get caught flat footed.
