For decades, many health plan sponsors that self-insure their medical and prescription drug coverage have purchased stop-loss insurance to avoid the financial impact caused by unanticipated high claims costs. Stop-loss insurance transfers the risk of large claims from the plan sponsor to an insurance carrier that reimburses the sponsor for claims that exceed certain thresholds. This helps plans maintain financial stability.
Two developments underscore the importance of taking a fresh look at stop-loss coverage. First, the Affordable Care Act has eliminated annual and lifetime dollar limits on essential health benefits. Second, the prevalence of high-cost claims has risen dramatically and the dollar level of those claims has increased.
Purchasing stop-loss insurance is a complicated process. Premium rates are obviously important in comparing policies, but trustees must also understand what their stop-loss insurance policies cover before they can make informed decisions regarding the best-value coverage that will help meet their objectives.
This NewsLetter reviews the basics of stop-loss insurance and how plan sponsors can use it to better manage the added risk and increased cost to plans that have made plan design changes to comply with the Affordable Care Act. It also looks at recent innovations and best practices for purchasing stop-loss insurance.
Since the Affordable Care Act became law in March 2010, the layers of complexity associated with compliance have multiplied. Consequently, now is an excellent time for trustees of multiemployer plans to check their group health plan's compliance with the law's current requirements - and to assess their readiness to meet coming compliance challenges.
An assessment will identify any actions that should be taken to reduce the risk of penalties and fines associated with noncompliance. An assessment will also help safeguard the plan from Affordable Care Act violations in the event of an audit by the Department of Labor (DOL), as part of the DOL's ongoing health and welfare plan audit program.
This NewsLetter provides an overview of how to assess a group health plan's Affordable Care Act compliance status.
It is tempting to assume that satisfying the following Pension Protection Act of 2006 criteria for being in the green zone means a multiemployer pension plan is well funded: the plan is at least 80 percent funded and its Funding Standard Account credit balance is projected to stay positive at least for the near term. However, because being in the green zone on a particular measurement date just means not being in the red zone (critical status) or the yellow zone (endangered status), it is not a measure of a plan's long-term financial well-being. In essence, there are many shades of green. The variance in hue only emerges as additional projections of the zone criteria are performed. Understanding shades of green is an important part of plan stewardship.
This NewsLetter notes the questions that Segal Consulting believes trustees of the majority of plans that are in the green zone should be asking themselves:
The steps required to determine whether a plan will remain in the green zone include determining whether a plan is projected to remain green in the absence of intervention, the likelihood that early remedial action might be necessary to ensure continued success, and how key measurements (such as funded ratio or credit balance) could change over time. Depending on their plans, the trustees may want to develop a strategy that incorporates future actions to increase the likelihood of the plan remaining in the green zone forever.
In June 2013, the American Medical Association (AMA) voted in favor of recognizing obesity as a disease that requires medical treatment. After noting how obesity treatments typically are covered today, this NewsLetter discusses the implications for plan sponsors of the AMA’s designation of obesity as a disease.
In response to the AMA’s designation of obesity as a disease, coverage for obesity treatment is likely to change. There are three potential treatments for obesity: clinical or non-clinical counseling with group or personal support services, prescription drug therapy, and surgical intervention.
To some extent, the designation of obesity as a disease will increase plans’ immediate costs. There are several strategies for dealing with the short-term cost increase associated with obesity’s designation as a disease.
Over the long term, covering obesity treatments is likely to save plans money by avoiding serious and costly chronic diseases and conditions for which obesity is a major risk factor, including, but not limited to, type 2 diabetes, hypertension, sleep apnea, gallstones, infertility, varicose veins, gout, osteoarthritis and deep vein thrombosis (DVT). The financial impact of obesity related diseases and treatments on medical plan budgets can be significant. Consequently, the potential long-term savings are substantial.