Qualifying for stop-loss insurance is a critical step to moving to a self-funded health insurance plan. Brokers who advise small groups know how challenging it can be to get a group qualified for this type of insurance coverage. Often, there’s simply not enough data for the underwriter to adequately price the coverage required to guard the group against high-cost claims. However, using small group claims data through Beacon for Brokers, brokers can present a more accurate picture of their group to their underwriting partners and qualify more groups for stop-loss insurance.
About stop-loss insurance
Stop-loss insurance is an important aspect of self-funding or partially self-funding a health plan as an employer. It provides protection against catastrophic or unpredictable losses. It is purchased by employers who have decided to self-fund their employee benefit plans but do not want to assume 100% of the liability for losses arising from the plans. After reaching a deductible or limit either for the group or a limit for an individual the insurance company becomes liable. According to the most recent data from Sun Life, from 2016 to 2019, 24% of employers had at least one member with claims over $1 million. To support the health needs of their group, one of the most important decisions an employer has to make is how much stop-loss coverage they’d like to elect.
Why it’s hard to qualify for stop-loss insurance as a small group
Small employers that would benefit the most from self-funding cannot qualify for the stop-loss insurance coverage they need to make the leap to self-funding all or part of their plan. According to industry reports directly from major stop-loss carriers, they’ve only qualified 5-10% of small groups they see. As a result, small employers pay on average 25% more for their healthcare benefits.
In any insurance category, knowledge is power. Historically it’s been challenging to qualify small groups for medical stop-loss because there is no claims history. For large groups over 100 (or higher in some states), the carrier provides the broker and underwriters with historical claims data –or plan utilization data–which leads to a more accurate picture of the group’s overall needs and the possible outcomes (and high claims) for the coming year. In the absence of this claims history for the group, underwriters rely on demographic factors to assess risk, which results in a wide range of possible outcomes and therefore is difficult to price.
What is missing is the data. Without the claims data from our new product for brokers, Beacon, fully-insured companies (particularly small and medium-sized businesses) are left in the dark about utilization data, making it next to impossible to obtain an accurate stop-loss quote for their unique employee population.
Small group claims data can help more employers qualify for stop-loss insurance
Claims data for small groups can help more groups qualify for stop-loss insurance because it gives underwriters the same intel about the group as a large group. Small group claims data is one of the most accurate predictors of a group’s overall risk.
Using Beacon, brokers can have access to small group claims data for any group they advise.
How to access small group claims data using Beacon
Brokers working with small and medium-sized businesses can help their clients qualify for stop-loss insurance using small group claims data from Beacon by TPA Stream. In less than 30 days, the broker will have a full picture of medical claims for any group. The process is simple:
- Employees enroll to provide their claims data.
- We harvest the claims and they’re securely housed in a HIPAA-compliant, SOC II Type 2 database.
- Once you as the broker are happy with the enrollment, you can access reports like the Small Group Risk Assessment report which summarizes the twelve risk factors underwriters use when assessing a group. Other reports include the detailed claims report and summary claims report, among others.
- The data is exportable for further analysis, allowing unprecedented accuracy with plan creation and stop-loss quotes.
We’ve seen this from our broker clients: using this approach they’ve been able to qualify groups for stop-loss insurance.
What’s next
Access to claims data for clients of all sizes is within your reach with Beacon by TPA Stream. We’d love to show you how. Request a demo here.
Related:
- Whitepaper: Learn how small group claims data helps you more accurately assess a group’s needs and sets you apart
- The Employer’s Guide to Self-Funded, Level-Funded, and Fully Insured Health Insurance
- Broker’s Biggest Problem: Missing Small Group Claims Data
- Healthcare claims Data is Becoming an Expectation and is Possible
- What Can Employers Do to Lower Health Insurance Costs?
- Self-Funding: What’s Claims Data Got to Do With It?
Sources:
What is Stop Loss Insurance? – Health Care Administrators Association (HCAA)