Multi-Million-Dollar Claims are Blowing Up Health Budgets: Are You Covered?

As healthcare costs continue to rise, it’s hard for even the largest employers to forgo stop-loss insurance. The number of claims $1.5 million and above rose 54% between 2015 and 2018. And claims $3 million and above doubled just last year alone, according to a recent Sun Life analysis.

With the FDA approval of Zolgensma, a $2M+ treatment for a rare childhood disorder and just the latest example of a high-priced specialty drug, employers can only expect to see multi-million-dollar claims with greater frequency. Sun Life’s highest claim topped out at $7.5 million in 2018 and we’ve seen claims even larger than that. As a result of these trends in catastrophic claims, the prevalence of employers purchasing stop loss continues to grow. For example, between 2016 and 2018, the use of stop-loss among jumbo employers (20k+ employees) jumped from 31% to 38%. 

Are you taking unnecessary risks with your healthcare dollars? If you haven’t historically purchased stop-loss insurance, I’d encourage you to revisit that decision – the severity and frequency of large claims have likely increased exponentially since that decision was made. If you already purchase stop-loss insurance, how good is it? Review your existing policy to make sure you’re purchasing the appropriate level of coverage. And remember, the devil is in the details. Best in class stop-loss policies include multi-year rate caps and no new laser provisions.

Our industry-leading stop-loss coalition has helped many employers find the best policy option for their organization. We provide the most comprehensive and competitive risk management arrangements in the market. Our profit-sharing provisions have resulted in more than $23 million in premiums being refunded to participating employers since 2009. And our experienced clinicians work in coordination with financial and audit experts to help deliver appropriate care strategies to reduce costs.

If you’re still not convinced that traditional stop-loss insurance is the right strategy for your organization, it might be worth looking at a captive to manage the risk. We have some innovative captive solutions for employers of all sizes. MedPool re-enables employers to utilize either a new or existing single parent captive to combine stop-loss coverage with a layer of pooled multi-employer risk. And for larger employers, we’ve created a Catastrophic Claim Captive Solution that brings employers together to share ownership and risk of claims in excess of $2 million while providing clinical and operational oversight to help mitigate losses.

Multi-million-dollar claims are occurring with greater frequency with no signs of letting up -- make sure your organization is protected.

To learn more about Mercer’s stop-loss solutions and captives, contact Dan Davey or your Mercer consultant.

Daniel Davey
by Daniel Davey

Principal, Stop Loss Practice Leader

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