This is an excellent question and one that was covered at the last installment of Cypress University in April when we brought back our panel of stop loss experts (always a popular session!).

Having the right stop loss policy in place is instrumental to the successful operation of a self-funded plan. But a carrier isn’t just going to automatically take on every group that comes along asking for stop loss coverage. There are a lot of factors considered in the underwriting process and the decision of whether or not to cover. Here are some things we learned from our stop loss partners:

  • Carriers pay close attention to the kind of claims experience a health plan has had over the last few years. The more data you can provide, the better. Having the full picture helps ensure the most competitive quote.
  • Loss ratio is a factor. Before offering a policy, carriers want to understand a group’s claim history/track record.
  • Share the cost containment solutions you have in place through your TPA. If you’re taking extra steps to control claim costs, it can help lower your rates.
  • Provide plenty of time to evaluate. There’s a lot for carriers to consider in the quoting process, so give them ample lead time to pull everything together.
  • Relationships are important. Carriers will vet a TPA when new business is presented if there is no past work history between the two. Good working relationships can lead to preferred partnerships (and better rates!)

On the flip side, what should groups and TPAs consider when they’re in the market for a stop loss carrier? A few suggestions:

  • Experience. Start by checking out carriers who have been in the stop loss business long-term. This is a changing industry, so it’s good to partner with a firm that’s been through the ups and downs.
  • Provide sufficient data (because actuaries love it!). Some groups are turned away, especially in the transition from fully funded to self-funded, for the simple reason that there wasn’t enough info to work from.
  • Be wary of rates that seem too good to be true. They often are! If you receive multiple quotes and one seems way off from the others, it’s probably a red flag.
  • Take advantage of incentives. Some stop loss carriers will offer 90-day or other locks to set your rates. Don’t wait too long and miss out.

There’s a lot for carriers and employer groups to consider with new stop loss policies. If both parties do their homework, the end result is often a better one!

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