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Employee Benefit News ran an interesting piece on small employers flocking to self-funding. While that made sense to me, it made me wonder about the self-funding trends in general. The truth is, less than 10% of employers of any size totally self-insure their medical plans. The majority of those that self-insure do so with stop-loss protection. In checking Mercer’s National Survey of Employer-Sponsored Health Plans, we have seen an increase in self-funded plans with stop-loss from 63% in 2014 to 71% in 2017 among employers with 500 or more employees. For employers with 200-499, the increase was from 34% to 39%. The biggest movement was among employers with 500-999 employees from 51% to 65%. The surprising finding was the increase in jumbo employers, those with 20,000 or more employees, with 36% buying stop-loss in 2017, up from 25% in 2014. The median deductible for individual stop-loss is $225,000, with jumbo employers taking more risk with a $750,000 attachment point.
The requirement of the ACA to remove lifetime annual benefit limits has driven more companies to purchase stop-loss insurance. But the bigger driver has been the increase in very expensive claims that I wrote about recently. Regardless of your current funding method, it is a good idea to evaluate your risk for high dollar claims every year at renewal time and include the finance department in the discussion.
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