02.15.23 Blog

Think Your Client is Safe from a High-Cost Claim? Think Again!

supplemental stop-loss insurance protects against common high-cost claims

When your client has a plan that is protected by traditional insurance options, the potential costs of claims are typically well beyond the perceived lower cost of covered medications members are taking. That’s because traditional insurance carriers are not in the business of losing money, and often increase premiums substantially or laser out the impacted members in subsequent plan years to protect their own bottom line.

7 Common Areas That Make Companies Vulnerable to Unpredictable, Large Claims

Given the  cost and growing roster of specialty medications available today, the risks of an unpredictable high-cost claim hitting an employer-sponsored plan are greater than ever — no matter how well your client’s self-funded plan is managed. And unpredictable doesn’t mean uncommon, as the incidence of these large claims continues to rise. In fact, 64% of employers reported filing at least one catastrophic medical or pharmacy claim in excess of $500,000 in recent years.

Here are the top seven impending and unpredictable risks that impact employers most often:

  • New Diagnosis: Imagine if an employee received a new diagnosis for a rare or complex disease such as Parkinson’s Disease. And while deemed “rare,” such diseases actually affect 30 million people in the U.S. alone — that’s 1 in 10 Americans. Your client’s plan member can be one of them, increasing the likelihood of a large claim.
  • New Indication: Not to be confused with a new diagnosis, an indication identifies the reason for use of a particular medication that has been approved by the Food and Drug Administration (FDA). Indications per member can shift often based on changing or worsening conditions experienced by an individual. This, in turn, can result in an updated prescription regimen that can lead to fluctuating costs, especially if a high-cost drug is introduced.
  • New Medication: In 2022, the U.S. Food and Drug Administration’s Center for Drug Evaluation and Research (CDER) approved 37 new novel drugs. Beyond a new diagnosis that adds a new prescription to your plan costs, it only takes one high-cost drug to receive FDA approval in the middle of a plan year to blow out a client’s budget.
  • New Spouse or Life Partner: It doesn’t have to be an employee that directly impacts a plan. For instance, if an existing member gets married, they may opt to add their spouse to their plan if the option is available to them. Such additions can be made throughout the year, outside of traditional enrollment periods. If an added spouse has a pre-existing condition, an employer may incur unplanned costs.
  • New Child: Speaking of big life events, the birth or adoption of a child can also impact an employer-sponsored plan. If a member’s child is born or an adopted child has a serious condition that requires a high-cost drug treatment, an employer might take on the weight of that cost. Many specialty conditions are inherited so it is not unlikely a single family could create multiple exposures to the plan.
  • New Hire: During the hiring process, an employer is focused on if a candidate can do the job, not if they have a chronic condition that requires specialty treatment. However, a new hire can result in an additional unexpected liability for your client, as that new hire could have a condition unknown to the employer.
  • New Laser: In an effort to proactively protect their plans against large claims, some, if not many, of your self-funded employer clients may have implemented stop-loss insurance to mitigate impact. But traditional stop-loss coverage has its limitations — like the lasering of large claims. Included in many of these contracts, a stop-loss carrier has the ability to discontinue covering a high-cost claim or claimant after the initial contract year, leaving plan sponsors unprotected the following year. In fact, 21% of plans have reported at least one lasered claimant.

Help Your Clients Take Action with Supplemental Stop-Loss Insurance Before It’s Too Late

Potential scenarios can quickly turn into a client’s reality where they are faced with devastating financial impacts. Therefore, it’s crucial to emphasize to clients that they need to take a proactive and comprehensive approach to protection.

All seven of these scenarios are events that occur regularly. We are hearing more often from the pharmacy benefits brokers we work with that their clients are getting hit with big claims at higher rates than ever before. It’s no longer a matter of if this may happen to your clients – it’s a matter of when.

Make sure your clients are protected from the unpredictability of a large claim that can blow their budget by introducing supplemental stop-loss insurance, like RxPharmacy Assurance, to their arsenal of protection. Our solution allows employers to effectively control costs, manage risks and fill the gaps left by traditional stop-loss options. Supplemental stop-loss insurance can be added to an employer-sponsored plan at any time to address future, unknown risks. As a result, it’s best to establish coverage before an unexpected claim inevitably hits. Don’t hesitate. Talk to your clients about the benefits of protection and contact us today.