Archived Insight | June 25, 2019

Stop-Loss Insurance Coverage by the Numbers

Stop-loss insurance provides protection against catastrophic or unpredictable losses.

It’s a common feature of many benefit plans and, with the burden of high-dollar medical claims continuing to increase in frequency and severity, it’s important to review how stop-loss coverage protects assets and makes costs more predictable.

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Questions about stop-loss insurance? We have answers.

Get in touch with one of our consultants and let's start a conversation today.

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Our infographic will help you understand how plans are using stop-loss insurance, including:

  • The most common deductible levels.
  • Individual stop-loss premiums.
  • Recent average stop-loss premium increases.
  • Plan renewal rates.
  • New options, such as prescription drug-only coverage and shared-saving policies.

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Summary of Findings on Stop-Loss Coverage

Here are some of the key findings.

  • The burden of high-dollar (“shock”) medical claims continues to increase in both frequency and severity.
  • Two primary diagnoses accounted for more than 40% of all claims of $1 million or more in 2018: perinatal/neonatal and malignant neoplasms/cancers.
  • Average stop-loss premium increases have been higher at lower specific deductible policy levels in recent years.
  • Most plans that bid or renewed their stop-loss insurance stayed with the incumbent insurer.

Questions? Here’s How Segal Can Help

Segal can review your actual claims data to assess the adequacy of your current stop-loss coverage.

If you have a relatively low deductible for your group size, consider raising it in order to lower your premium costs.

To assess the competitiveness of your coverage, we will draw on our database to compare your stop-loss coverage to the coverage purchased by similar plans. 

You can define the criteria for that comparison by:

  • participant size,
  • participant demographics and/or
  • geography.

We can also help you renegotiate your stop-loss coverage. During that process we can explore relatively new options, such as prescription drug-only stop-loss coverage and shared-savings policies that pay experience-rated dividends if premiums exceed claim reimbursements by a pre-defined ratio.

Another option to consider is an aggregating specific deductible, an additional “bucket” that must be filled from any large claims that exceed the specific stop-loss deductible.

In exchange for assuming additional risk, the plan should receive premium savings. If reimbursed claims are lower than anticipated, the plan retains the difference.

If you’d like to learn more, just get in touch.

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This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.