The frequency of medical stop loss claims for COVID-19 more than doubled from 2020 to 2021, according to QBE North America’s 2022 Accident & Health Market Report. The annual report highlights industry trends that can help employers consider how to better manage their self-funded healthcare plans.
The report found that the frequency of medical stop loss claims for COVID-19 rose 108% from 2020 to 2021. Moreover, the increase was widespread across age groups, with the youngest age group (0-29) seeing a fivefold increase. As of April 2022, claims within the younger age groups – 29 and under and 30-39 – had already hit levels similar to those posted for all of 2021.
“The highly infectious COVID variants, together with the prevalence of comorbidities, has lowered the average age for a stop loss claim from 54 in 2020 to 49 in 2021, and the average cost of a COVID claim climbed 87% year over year,” said Tara Krauss, head of accident and health at QBE North America. “We saw a few multimillion-dollar claims, which we didn’t expect at the start of the pandemic. One case that involved a patient in intensive care for more than five months settled at $4.6 million. Furthermore, as the pandemic evolved, we saw increased claims severity in younger populations covered by employer-sponsored plans, particularly for patients with comorbidities.”
When analyzing claims exceeding $200,000, QBE found that frequency had increased 17% from 2020 to 2021. Respiratory claims nearly doubled, while neoplasms spiked 21%. Mental illness claims fell 15% but remained well above pre-COVID levels, while circulatory claims dropped 16%.
“The overall increase is likely due not only to claims directly related to COVID, but also indirectly related through the impact of delayed care,” Krauss said. “For instance, in 2020 screenings and non-critical treatment for neoplasms were delayed, which presented an opportunity for the disease to worsen and require more extensive treatment. We are seeing early signs of increased severity and anticipate a significant impact through 2023 since neoplasms have for many years represented the largest share of claims above $200,000. In 2021, they accounted for 41%.”
In addition to medical stop loss claims trends, the report discusses a range of topics for employers to consider in their long-term claim financing and risk transfer planning. Other topics covered in the report include:
- Market highlights for medical stop loss (along with captives), organ transplants and special risk accident insurance
- The rise of high-cost cell and gene therapies
- Medical risk management strategies
- Cost containment opportunities
“Currently, 160 million Americans are covered by employer-sponsored health insurance plans, and nearly two-thirds of those plans are self-funded by the employer,” said Steve Gransbury, head of QBE’s specialty and residential business portfolio, which includes A&H. “As costs continue to rise and the quality of care grows increasingly important, medical stop loss insurance and related products will continue to serve as key tools for managing volatility.
“In addition to this insurance protection, we strive to provide insights and advice for our customers to help them plan for future challenges and opportunities. In that spirit, we’re pleased to offer our second annual QBE Accident & Health Market Report.”