Self-funded health insurance is the right choice for many midsize and even small employers. Self-funding may allow your business to save on healthcare costs and customize your coverage to better suit your employees’ specific needs. This kind of plan can be financially risky; instead of paying set premiums to an insurance carrier, a self-insured employer is responsible for all of its employees’ claims. Those are unpredictable costs.
This risk is why self-insured employers also buy stop-loss coverage. Combining your self-funded plan with stop-loss coverage limits your liability. (Buying specific stop-loss puts a cap on how much you can expect to pay in claims for any one individual, while aggregate stop-loss caps how much you’ll pay across the entire plan.)
A stop loss broker like us can help you get quotes for stop loss carriers. Our clients, self-funded municipalities and companies, rely on us to help them compare their options when it comes to stop loss insurance. Since many carriers offer similar but not identical services, it’s important to gather some information before committing to any one of them. Here are seven questions to consider asking.
Questions to Ask of Stop-Loss Carriers
Stop-loss coverage can seem confusing at times, especially if you’re new to this product. It’s essential that you understand the ins and outs of your stop-loss coverage so there are no surprises once those high-cost claims come in. That’s why I encourage people to ask questions. Here are just some of the questions I suggest you ask before you’re ready to choose a carrier.
How long has the carrier been in business, and what do other customers say?
Whether you’re comparing cloud solution providers or stop-loss carriers, reliability and customer satisfaction are key indicators of a business’s trustworthiness. You need the assurance that your stop-loss carrier will follow through on its promises. Consider how long various carriers have been operating; longer isn’t necessarily better, but you do want to align with an established carrier.
You won’t find many reviews online of stop-loss carriers, so consult your network. Check with any contacts you have in self-insured businesses to see if they have positive or negative feedback about a specific carrier. Your stop-loss broker can also help you compare the specific pros and cons of your various options.
Who will be our contact when we need help?
While you’re not a neophyte, you’re probably not a self-funding or stop-loss expert either, and you don’t need to be one to take advantage of the benefits of this insurance strategy. You should be able to rely on your stop-loss broker and stop-loss carrier to walk you through any necessary decisions. It’s worth asking whether you’ll be able to reach a familiar point person if you ever have concerns about your stop-loss coverage.
What can we expect at renewal?
Being able to anticipate what will happen when you renew your stop-loss policy is critical for long-term planning. Will your carrier laser (exclude) high-risk claimants at renewal? Will you be protected by a rate cap that keeps your renewal premium within a predictable range? What’s the carrier’s renewal process like?
How quickly will we be reimbursed?
Stop loss works on a reimbursement basis. A self-insured employer pays its own claims directly. Its stop-loss carrier then reimburses the employer, if the carrier owes any portion of the claim. This arrangement can overextend a smaller business’s resources. Fast and efficient claims reimbursement is essential for optimal cash flow. Find out how quickly you can expect to be paid back for both aggregate and specific claims.
Is there an advance funding option?
The reimbursement model just isn’t viable for some self-insured businesses. If you can’t afford to pay out high-dollar claims upfront and wait for reimbursement to come later, consider stop-loss carriers that offer advance funding. With this option, your stop-loss carrier will front the money to pay for any approved high-dollar specific claims.
What happens if we cancel?
Sometimes self-insured employers decide to return to the fully-funded market. You may be able to secure terminal liability riders, which would cover claims incurred during the three- or six-month period after your cancellation date. This protection allows you to avoid coverage gaps while transitioning to fully-funded insurance.
What kind of information can we access, and how easy do you make it?
Plan transparency is one of the benefits of self funding your health insurance plan, and that extends to your stop-loss policy. Owning your plan gives you a treasure trove of data that can help you improve plan quality and cut costs in the future. Make sure that the carrier offers a user-friendly way to quickly access reports, review account documents and check the status of claims.
As a stop-loss broker, I’ve spent years helping clients navigate these kinds of questions and find the answers they need. Let me help you determine whether self-funding and stop-loss are the right solutions for your business. Contact me today!