Medical stop-loss is becoming more common among healthcare employers, according to a presentation at the Captive Insurance Companies Association (CICA) International Conference in Scottsdale, Arizona.
Mid-sized medical employers, or those that have 100 to 1000 employees on their books, have already saved approximately 2.5 percent by shifting from buying insurance to self-insuring.
This form of insurance costs more to set up but, ultimately, gives greater flexibility to employers—primarily by being able to put money into protected cell companies (PCCs) or group captives, instead of an insurer’s pocket, according the presentation.
These captives pre-fund the risk, allowing it to be shared across employers, business units and lines of coverage—while also achieving insurance company status for tax and accounting purposes.
With US hospitals needing more and more protection from state regulations, this move towards medical stop-loss looks to establish more regional or industry based insurers—such as the Maine Wellness Association, or Montana’s Employee Benefit Management Services.
Despite this trend towards medical stop-loss coverage, there is still uncertainty among regulators such as the National Association of Insurance Commissioners, which are unsure about how these relatively new formations should be regulated.
This is due, in part, to the fact that there remains no formal definition of self-insurance in US federal law, said the presentation
