Stop Loss Markets Putting the Brakes On

Recent trends in the medical stop loss market are showing most stop loss risk managers have been suffering significant losses in the past few years.

This can be attributed to an increased number of high cost claimants, newly released specialty medications, and the required removal of lifetime plan maximums due to recent legislative changes to the Patient Protection Affordable Care Act (PPACA). The result is a hardening of the stop loss market which is producing large renewal increases, selective underwriting, and rigorous claims processing.

What can you do to help prepare for your next renewal? 

Employers can review their claim review process which should include how emerging high cost claimants are identified. This allows you to verify if case management should be involved or engage the support of health management. Should the claim appear to be an ongoing condition, this also allows you more time to prepare for any renewal action that may require a higher individual specific stop loss deductible on this claimant. Ultimately, it will give you more time to request and review the case manager notes, any potential treatment plan, and evaluate the projected expenses.

Current and future trends of the stop loss market

growing trend to consider is purchasing a stop loss proposal that has a no new laser and rate cap features that would help protect your plan from significant rate increases due to large claimants. These specific contracts include some additional cost up front, but can save you significant amounts down the road.

Another important item to review is to compare the employer’s plan document and leave policies to the stop loss policy or contract. It is important to identify special provisions or arrangements to cover unique individuals of the group such as former executives, retirees, elected officials or any individuals on leave. Stop loss contracts standardly cover only current employees that are actively at work. They often will amend their policies to acknowledge these unique individuals, but with the tighter stop loss market these carriers are asking for validation around employee’s eligibility.

Based on these trends we recommend being well prepared before your renewal cycle. Take an inventory of your processes, review your contracts, compare them to your internal policies, and be prepared for higher increases than in years past. Getting an early start on these will help you avoid last minute decisions that may put your plan at risk.