The 2017 Aegis Risk Medical Stop loss Premium Survey confirms that stop loss coverage continues to be a valuable resource for businesses and their employees, and that plan sponsors are taking advantage of the myriad ways in which they can customize their coverage.
The survey, which was jointly sponsored by Aegis Risk and the International Society of Certified Employee Benefit Specialists, compared data from 502 plan sponsors, representing more than 710,000 employees with more than $322 million in stop loss premiums.
One trend that continues from last year is the high rate of catastrophic claimants. The percentage of respondents who incurred a claim in excess of $500,000 dropped just slightly, from 57% in 2016 to 55% in the last two policy periods. About one in five plan sponsors (21%) reported claims in excess of $1 million, and 9% reported claims in excess of $1.5 million.
The survey uncovered some changes in the way plan sponsors are making renewal decisions. Benefits/Human Resources teams continue to be very involved in making these decisions. About 10% of plan sponsors reported less involvement by Risk Management, Finance/CFO and Executive Leadership when it comes to making decisions about stop loss renewal.
One piece of the stop loss puzzle isn’t so easy to quantify, though. The survey’s authors concluded that it’s “difficult, if not irrelevant” to calculate an overall average premium cost because each plan sponsor has a unique set of needs. Factors that affect an organization’s premium cost include its specific individual stop loss (ISL) deductible, its risk tolerance and the number of enrolled employees.
For some plan sponsors, premium costs are dramatically affected by a mechanism called lasering, in which certain individuals are excluded from the plan because of the high cost of their coverage. Nearly half (44%) of plan sponsors’ policies prevent them from lasering, according to the Aegis survey.
Some of the survey’s other findings included:
- 98% of plans include pharmacy coverage, up from 92% in recent years.
- 14% of respondents reported aggregating specific deductibles (ASDs), with an average ASD of 66% of the underlying individual stop loss (ISL).
- 11% of respondents had at least one lasered claimant, compared to 18% in 2015.
The survey’s authors urge plan sponsors who want to reduce their stop loss premiums without sacrificing coverage to:
- Be aggressive in finding and taking advantage of all discounts that your plan allows.
- Work with a broker or consultant who has extensive knowledge of the complexities of stop loss coverage.
- Opt for stop loss policies that match your health plan and offer laser-free renewals with rate caps.