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Why did the cost of providing stop-loss insurance — insurance for employers' self-insured health plans — spike so hard last year?
One reason is that the number of huge claims increased. A lot.
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Sun Life U.S., a major stop-loss provider, says the employers that used its coverage in 2024 received 221 claims for $1 million or more per 1 million covered employees.
That was up 29% from the million-dollar claim rate in 2023, according to Sun Life's latest U.S. stop-loss market analysis.
The total number of claims for $3 million or more rose 47%, to 47.
The highest single 2024 claim, for a patient suffering from a birth defect, was for $12.7 million. That was about 15% bigger than the most expensive claim Sun Love covered the year before.
Related: Sun Life sees stop-loss problems spiking: Will it force employers to buy fully insured coverage?
Sun Life based the new high-cost claim report on a review of about 65,000 stop-loss claims received from 2021 through 2024, $15 billion in underlying total medical cost and $7 billion in stop-loss reimbursement payment to employers.
COVID-19: Sun Life notes that the cost of high-cost claims increased even though the cost of stop-loss claims caused by COVID-19 dropped to $4.6 million in 2024, from $128 million in 2022.
The reasons: Jennifer Collier, president of the Sun Life U.S. health and risk solutions business, said in a commentary on the analysis that the frequency of jumbo claims is increasing because of factors such as increases in labor costs, increases in supply costs, cost-shifting from government programs and the introduction of expensive new treatments.
In June 2024, for example, Sun Life spent $6.8 million on Elevidys, a new gene therapy drug for people with Duchenne muscular dystrophy.
Most patients with stop-loss claims for more than $3 million in a single year also faced long inpatient hospital stays, and many underwent complicated surgeries, according to Sun Life.
Collier maintains that combining stop-loss insurance with self-insurance is still the best way for employers to address the rising cost of care.
"We have expanded our focus on improving access through condition-specific programs and care navigation services," Collier said.
Defenses: Sun Life says the best defense against jumbo claims is offering generous coverage for the kinds of screenings, preventive care and high-value sick care that can catch problems early and keep small problems from becoming big problems.
When fighting conditions such as cancer, "early detection and treatment confirmation have a big impact on improving outcomes," the company says.
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Allison Bell
Allison Bell, a senior reporter at ThinkAdvisor and BenefitsPRO, previously was an associate editor at National Underwriter Life & Health. She has a bachelor's degree in economics from Washington University in St. Louis and a master's degree in journalism from the Medill School of Journalism at Northwestern University. She can be reached through X at @Think_Allison.
