Surge in healthcare costs making stop loss insurance more attractive

Health benefits provider speaks about its new partnership

Surge in healthcare costs making stop loss insurance more attractive

Life & Health

By Gia Snape

Medical stop loss insurance is becoming an increasingly attractive option for employers amid the surge in health benefits costs across in the United States, according to a leader at Independence Blue Cross.

Stop loss insurance can protect employers who take on the financial risk of providing health insurance for their employees against large, unpredictable, or catastrophic losses from higher-than-anticipated claims.

“The price of new treatments, therapies and drugs, and advancements in medicine overall, for both chronic and acute diseases that may require transplants or significant care, are continuing to rise,” said Mike Sullivan (pictured), executive vice president and president of diversified markets at Independence Blue Cross (Independence).

“We’ve seen the overall cost of health care rise significantly over the last number of years and that’s really driving up the number of large claims we’re seeing.”

Stop loss insurance partnership

To better support employers, Independence has partnered with financial services giant Sun Life US to provide stop loss insurance for Independence’s self-funded group customers.

Independence is a health insurance provider in southeastern Philadelphia and an independent licensee of the Blue Cross and Blue Shield Association.

It aims to offers a comprehensive approach to self-funded customers’ health plans that helps them balance and optimize healthcare costs while enhancing their employees’ healthcare experience and overall well-being.

The medical stop loss insurance program features:

  • Customizable solutions with competitive pricing and reduced fees for Independence Blue Cross groups
  • Reporting with actionable insights for employers to make decisions about their self-funded plans
  • Cash flow solutions with an advance funding program to pay claims at the time they are received, rather than waiting for a reimbursement check after they are paid

The choice to collaborate with Sun Life came after a strategic search among national carriers, according to Sullivan.

“It was a shared vision on how to best meet the needs of our customers that made this the right fit for Independence. With Sun Life, we can add even more value to our employer groups plans,” he said.

The new program will be effective January 1, 2024, but select benefits will be available now through the end of 2023 for new Independence self-funded employer groups who choose Sun Life for stop loss insurance. 

Independence also hinted at new program features to be introduced in the future.

“The biggest feature is the spec-advanced funding. We will also have ‘no-laser renewals,’” Sullivan told Insurance Business. “We are guaranteeing contract alignment between Sun Life and Independence, so that anything that is covered through our plan is covered under the stop loss plan.”

Data sharing for better risk pricing

Another key feature of the Independence collaboration with Sun Life is the use of data to identify claims trends and enable better risk pricing.  

“The more data we have, the more accurately we can price the risk,” Sullivan said. “People’s health situations change, so as time goes on, the risk of that employers, and individuals covered under the employer’s plan, changes.

“The sooner we know that the quicker we can estimate the risk and manage the individual members together. We can utilize both Sun Life’s data and our own to manage those claims.”

Sun Life, for its part, said it was proud to offer stop loss coverage through Independence.

“Sun Life’s stop Loss coverage helps employers manage the high costs of care while continuing to offer comprehensive health coverage for their employees,” said Jen Collier, president, health and risk solutions, Sun Life US.

“Working with Independence Blue Cross will give self-funded employers in southeastern Pennsylvania a stop loss insurance option that helps drive both excellent care and efficient cost outcomes.”

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