Blog // HealthSmart Blog // March 2021

6 Things You Should Know About Stop Loss Insurance

3/8/2021 1:26:40 PM

6 Things You Should Know About Stop Loss Insurance That Will Save Your Clients Time and Money

by Tom Mafale, EVP, Chief Sales and Client Officer

Employers’ interest in self-funded health plans is on the rise. Today, more than 60% of all employers in the U.S. self-insure their employee medical benefits. Your clients with self-funded health plans enjoy a variety of benefits – immediate opportunities to reduce costs, tax benefits, “just right” coverage tailored to their employee group, freedom from state mandates, and more. But one catastrophic claim can deal a severe blow to the plan and its sponsoring organization. High-cost specialty drugs and the continued growth of $1 million+ claims are pushing more and more clients to utilize stop loss insurance.
As a third-party administrator (TPA) with years of experience helping clients place stop loss coverage with insurers, HealthSmart has gained valuable insight that can help you manage your clients financial and operational challenges associated with unanticipated large claims. Based on our experience, here are six things you should know about stop loss insurance that will save your clients time and money.
  1. Work with an experienced partner that places stop loss insurance with a wide variety of industry-leading insurers. There’s not a one-size-fits-all stop loss solution. Every self-funded health plan has a unique membership with unique healthcare needs. Today’s expansive and complex claims environment require new and different attention to risk from benefits consultants and TPAs. Finding the stop loss coverage that’s right for your client means being able to shop among an array of industry-leading stop loss insurers. Besides factoring in your clients’ specific needs, the TPA should evaluate the potential carrier’s rating – A++ or A+, how long it has been underwriting stop loss coverage, client reviews, and its track record to timely and accurate claims payments. .
  1. Engaging a TPA can result in better terms from the stop loss carrier. A TPA with experience working in the specialized stop loss field, can often deliver better underwriting terms and rates than you or your client could get working directly with the insurer. Your TPA partner should help you answer these questions on behalf of your client:
  • Does the stop loss policy language mirror the coverage provided by your client’s self-funded plan? Typical exclusions in stop loss policies include services such as transplants, however that may be a benefit your client offers through existing coverage it provides to its employees.
  • Is there “lasering” language in the policy terms – that is, based on an employee’s sickness, can coverage be limited or terminated? An effective TPA will make sure there are no lasers in the stop loss insurer’s policy language.
  • Does the stop loss insurance policy adhere to the Affordable Care Act’s requirement to provide unlimited coverage per year with no lifetime cap limits for essential health benefits?
  1. Enhance sustainability by controlling costs. The financial well-being of your clients’self-insured plans requires constant attention to controlling costs without sacrificing service quality. A well-negotiated stop loss policy will clearly define stop loss maximums. Coupling a comprehensive care management program with a proactive pharmacy benefits management program and integrating them with a stop loss policy will produce the greatest value for your client and its health plan members.
  1. Coupling effective stop loss administrative strategies with comprehensive care management and pharmacy benefits management services creates the greatest value. The ideal stop loss partner will bring a variety of resources and expertise to the table to help your clients reap the greatest value. Stop loss coverage that creates a win-win-win situation for you, your client and your client’s members will tap into a robust menu of industry skills including billing and coding, cost containment, and underwriting. These skills should be informed by the insight of a team of clinicians including physicians, specialty nurses, case managers and emergency medical technicians. The stop loss provider should have an established network of vendor partners that covers an array of specialty and complex care. Data driven solutions should guide targeted in-depth case reviews aimed at identifying the small number of members who are driving the largest claims payouts. Two additional pillars need to support effective stop loss coverage -- comprehensive care management and pharmacy benefits management. Evaluating the site of care, medical necessity, treatment alternatives including medications, plan coverage and language options, fraud and abuse, and member motivation for self-care, will fuel efforts to thwart catastrophic claims while providing the highest level of service to your members.
  1. Automated systems and experienced stop loss analysts can flag potential catastrophic claims, allowing early interventions to mitigate negative impacts on the self-funded plan. Similar to how actuaries use automation and algorithms to inform their decisions about premium pricing, industry leading stop loss carriers use the latest automated technologies with experienced analysts to identify potential future catastrophic claims. This is critical since 0.6% of your clients’ claims drive 35% of their self-insured medical and pharmacy spend each year.
  1. Take the burden of shopping for stop loss insurance off your plate. We can be your stop loss resource. While the concept of stop loss insurance is fairly straightforward, deciding on what type of coverage to purchase is not. Today, leading self-insured companies are joining forces with an experienced, knowledgeable stop loss partner. Our innovative approach to risk management integrates the expertise of HealthSmart and Point6, one of the nation’s leading stop loss insurance brokers. Our unique partnership provides the optimal solution to protect organizations like yours from unforeseen catastrophic healthcare expenditures by combining our insight and knowledge, with Point6’s expertise in managing large and complex claims through clinical consulting, and cost reduction strategies. Point6’s extensive network of stop loss insurance providers includes multiple premier stop loss partners and a variety of alternate stop loss partners. Together, HealthSmart and Point6 manage more than $1 billion in stop loss premiums with premium costs that average eight percent below market standards.
We’re ready to help you find the best stop loss insurance solution that will meet your employees’ healthcare needs and your organization’s business and financial requirements. For more information, please contact me directly at