Stop-loss Insurance Claims for Self-funded Employers

A very large number of Americans are covered by self-funded health plans provided by their employers.  Self-funding means the employer actually pays the health care bills, rather than buying coverage from a large health plan company, like UnitedHealth, Aetna, Cigna or one of the Blue Cross plans.  But most of these employers don’t want to be fully responsible for very large claims, so they buy what is referred to as stop-loss insurance, which covers individual claims that run over a certain dollar amount or aggregate claims over some amount.  Tracking the claims that hit stop loss insurers gives you a sense of where the large-dollar health cases are and what trends for those cases look like.

A report from Voya, a large stop-loss insurer, finds that the average cost of a stop-loss claim rose by 8% from 2021 to 2022 and that blood disorders, like cancers of the blood or hemophilia, account for the single largest category of claims.  Overall, heart disease, general cancers, early births and serious accidents account for many of the other high-dollar claims that his stop-loss coverage floors.  Much of the claim cost for many of these conditions is driven by specialty drugs, and cell and gene therapies are beginning to have an impact, which will grow rapidly in future years. Voya expects both the incidence and average cost of stop-loss claims to increase in future years, meaning that stop-loss premiums will rise, increasing the overall cost of health plans for employers, which in turn means they need to charge more for their services and goods, which factors into inflation.  Just one way health care will keep inflation churning.  (Voya Report)