By Cyril Tuohy
Guardian Life has introduced medical stop-loss coverage for self-funded employers to help companies cope with catastrophic medical claims, the company has announced.
The product has been approved in 23 states and nationwide approval is expected by the middle of next year.
“As employers see ways to control costs, shifting to a self-funded health plan is something they may consider,” Ray Marra, vice president of group products at Guardian, said in a statement. “Guardian’s stop loss insurance enables employers –large or small –that self-fund to manage plan costs while still delivering the health coverage their employees require.”
Guardian is the second major insurance company to announce the launch of a stop loss-related product in as many months. In September, Sun Life Financial announced the launch of a stop-loss rider to protect U.S.-based, self-insured employers against the cost of paying for cancer-related illness claims.
Recent activity in the stop-loss market comes at a time when government reform to the U.S. health care system removes individual lifetime maximums reimbursed by health plans. Unlimited lifetime maximums have increased the liability covered by medical stop loss coverage as a result, according to Aegis Risk Advisors, publisher of the Aegis Risk Medical Stop Loss Premium Survey.
Stop-loss insurance is bought by large self-insured employers with thousands of employees. Self-insured employers fund their own claims and stop-loss coverage kicks in only when the claim exceeds the high deductible.
The amount of premium in the stop-loss market is difficult to pinpoint. The 224 employers covering about 450,000 employees with more than $145 million in annual stop-loss premium in the 2013 Aegis Risk Medical Stop Loss Premium Survey represent a fraction of the market.
According to the Aegis Risk survey, the average premium ranges from $97.43 per employee per month for a $100,000 individual deductible to $12.19 per employee per month for a $500,000 individual deductible.
A total of 55 percent of respondents reported at least one claim in excess of $500,000 paid in the last two policy years and 14 percent reported a claim in excess of $1 million over the same period, the Aegis survey also found.
About 60 percent of U.S. employees covered by employer-sponsored health insurance in 2011 worked for companies that self-insure, according to the Kaiser Family Foundation.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at Cyril.Tuohy@innfeedback.com.
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