Catastrophic Claims Warrant Use of Stop-Loss Insurance

For the risk that there will be a catastrophic health benefits claim, employers with self-funded health benefits generally purchase stop-loss insurance.  

A report from the U.S. business group of Sun Life Financial reveals cancer remains the costliest disease, accounting for more than one quarter (25.7%) of the $2.1 billion Sun Life paid out to stop-loss claimants during the report’s four-year period. The top three conditions, which include cancer (malignant neoplasm and leukemia/lymphoma/multiple myeloma) and end-stage renal disease, made up 33.5% of total reimbursement costs.

One of the other top contributors to catastrophic claims costs is intravenous medications, which accounted for over $71.4 million, or 13%, of the total paid stop-loss claims during 2014. The top 20 intravenous medications are quite expensive and represent 65% of the total cost of intravenous medications administered for catastrophic claims conditions. Approximately half of the top 20 intravenous medications identified in the report are used to treat cancer, and represent nearly $25 million in treatment costs in 2014 alone.

The report also shows that individuals with claims in excess of $1 million remain a major driver of stop-loss payments, accounting for $348 million of the total paid stop-loss claims. Cancer, congenital anomalies (conditions present at birth), and premature births account for 28% of all claims breaching the $1 million mark.

The findings confirm the need for self-funded employers to protect against common health events that could turn into catastrophic claims. “Through our research, we are able to provide insight to the market on the conditions that drive high-cost claims and how self-funded employers can manage that risk effectively,” said Sun Life’s Brad Nieland, vice president, stop-loss.

The full report may be accessed here. A free registration is required.