Aegis Risk Medical Stop Loss Premium Survey for 2010
MyHealthGuide, www.myhealthguide.com
MyHealthGuide Source: AEGIS Risk, www.aegisrisk.com
This year’s Survey was completed in the wake of health care reform and its removal of individual lifetime maximums — which significantly alters the underlying risk covered by medical stop loss.
Although stop loss is not mandated to offer unlimited coverage, the risk is created, and according to this year’s Survey,
79% of respondents intend to review its coverage.
44% of those stating its requirement. In comparison.
8% reported an unlimited stop loss maximum in pre-reform 2009.
With initial premium loads of as high as 20%+, employers actually selecting this additional coverage may vary in the end.
To assist plan sponsors, Aegis Risk produces this annual survey. In its fourth year, this summarizes findings on 2010 medical stop loss premiums and coverage, as well as evolving strategy in response to health care reform.
Average Stop Loss Premium
Stop loss coverage amongst plan sponsors varies greatly — causing development of an average premium cost a difficult, if not irrelevant, task. Each group has an individual stop loss (ISL) deductible, contract type and lifetime maximum that varies from another — all with significant impact on premiums. Enrollment size also impacts cost, with larger populations able to spread their catastrophic risk across a larger pool. Group demographics are another variable.
However, normalization of responses can be reasonably attained: larger plans typically select higher ISL deductibles, and contract variation (e.g. 12/12, Paid, 12/15) can be accounted for by underwriting ratios. For this survey, all contracts are equated to a mature Paid’ contract.
See AEGIS Risk Survey for the plotted graph, with ISL deductibles on the horizontal x-axis and average monthly premium cost per employee on the vertical y-axis, a trend line can be drawn showing average premium cost for the continuum of coverage. Further variation may still exist due to the size of the individual lifetime maximum, coverage of pharmacy, loads for broker commissions and group demographics. However, a strong approximation can still be made.
Make your own comparison — See Exhibit 3 on the next page: It provides a focused illustration of this graph for the most common deductibles. Gather premium rates, ISL deductible, contract type and enrollment to calculate your own position relative to Survey.
Trend
Stop loss often renews at higher than underlying medical trend due to leveraging — whereby a fixed deductible bears a larger portion of future claims.
15% is average leveraged trend, plus
5% additional load on trend for the anticipated market-wide impact of unlimited coverage.
Individual Coverage Specifications
Contract type varies widely, with Paid and 24/12 the prevalent choice for ongoing, comprehensive coverage.
Contract Type (or Claims Basis)
12% have 12/12 contract basis
22% have 12/15 basis
20% have 24/12 basis
3% have 18/12 basis
43% have Paid basis
Individual Lifetime Maximum 2010 Limits
20% have $1 million or less
51% have > $1 million to $2 million
16% have > $2 million to $5 million
13% have Unlimited
Anticipated request of an unlimited maximum, 2011
8% have None (will keep existing)
35% will review, as an option
44% must have an unlimited: 44%
13% already have it
Aggregate Coverage
75% of employers select 125% aggregate deductible
25% select 120%.
Average monthly premium
$6.05 is average premium if alongside an ISL of $150,000 or less,
$3.12 is average at higher deductibles.
$3.57 is median premium overall.
Pharmacy Coverage
81% of surveyed plans cover pharmacy — similar to 86% in 2009.
About the Aegis Risk Medical Stop Loss Premium Survey
The 2010 Aegis Risk Medical Stop Loss Premium Survey represents over 70 employers covering approximately 210,000 employees with $46 million in annual stop loss premium. Respondents range in size from 50 to 35,000 employees. Completed in partnership with the International Society of Certified Employee Benefits Specialists. The 2011 Survey opens in Spring 2011, with release in late Summer.
About Aegis Risk
Aegis Risk is a specialty consulting firm located in Alexandria, Virginia with a dedicated focus on stop loss — throughout the plan year. We partner nationally with employers, as well as other brokers and consultants. Visit www.aegisrisk.com.
Comments