Ten years ago, benefits self-funding—and the stop-loss coverage that typically accompanies it—was a world occupied mainly by large employers. Only those with more than 500 employees were typically willing take on the liability of providing employees with medical coverage, and only companies that size generally had cash flow adequate to the job.
Within the last year, however, the world of self-funded benefits and stop-loss insurance has begun to change. Propelled in part by health care reform legislation, smaller companies are self-insuring more often and buying more stop-loss coverage. The result is a bigger stop-loss insurance market—and more flexibility and customization for a wider variety of employers and their workers.
A surge in popularity
Health care reform is a force behind the change, industry experts agree. “The premise of health care reform was to lower the cost of health care, and that hasn’t been accomplished,” Fry says. A May 2010 Towers Watson study surveyed 650 senior benefits professionals. Only 14 percent of respondents think health care reform will help contain heath care costs.
Wellness and consumer-driven care
Self-funding companies can passively pocket whatever savings exist—or they can actively nudge their employees in healthier directions, combining the trend in self-funding with another movement of corporate wellness programs and consumer-driven health care. That puts more responsibility on employees to keep medical costs down by actively managing their health.