Companies that self-fund their employee health insurance plans are increasingly using medical stop-loss captives, according to a whitepaper by QBE North America.
The whitepaper, Medical Stop Loss Captives: Issues and Answers, concludes that a key advantage for large companies with their own captives is the ability to provide the stop-loss coverage in the form of reinsurance rather than insurance.
Reasons for the increase include large companies that do not need to pair medical stop-loss with their self-funded plans are now finding that the coverage is necessary due to rising healthcare costs, caused largely by mandates in the Affordable Care Act (ACA), such as the removal of lifetime limits.
Another reason for the increase is large companies, which already have a self-funded plan and medical stop-loss coverage, are now looking for more efficient methods to finance coverage.
There has also been an increasing number of small- and medium-sized companies converting to self-funded plans to manage costs of complying with the ACA. To do this, they need medical stop-loss coverage, and insurers are developing new group captive structures in response.
According to QBE North America’s whitepaper, a captive’s participation in an excess coverage that supports a self-funded plan will increase the benefits derived from self-funding alone.
A captive can also efficiently absorb some of the risks often excluded by traditional medical stop-loss policies, such as certain individuals with large, ongoing medical conditions.
Phillip Giles, vice president of sales and marketing for QBE North America’s accident and health business, commented: “We’ve seen interest for these types of plans double over the last few years.”
