The purpose of any insurance is to mitigate risk and group insurance is no exception.
Imagine if you would, an employee who earns $56,000 a year, has Hepatitis C and has been prescribed Harvoni at a cost of $69,910 for nine rounds of treatment. For all intents and purposes, when this employee completes the prescribed rounds, they will be cured and the benefit plan would have done its job in offering a true ‘benefit’ to this employee.
Hep C is just one of several costly medical conditions employees in any income level, of any race, gender, or geographic location, can suffer from. Those with rheumatoid arthritis, cancer, and multiple sclerosis are now being prescribed medications which cost in excess of $30,000 a year, every year.
But wait…that’s $69,910 in costs to the prescription side of the benefit plan. Won’t the rates only escalate to recover that cost?
No.
That’s why stop-loss provisions are built into the benefit plan.
Stop loss insurance is designed to protect employers against sudden, unexpected, catastrophic risk. Claims in excess of the stop loss deductible per person per year (in this case $10,000) are insured and do not count against the employer’s experience when setting health care budgets for future renewals. This limits the employer’s risk, while enabling continued coverage and protection for employees through the benefits plan.
The true cost the employer’s experience was the $10,000 for this one claim. That’s close to a $60,000 gain on the investment into that employee’s health.
Consider this, had this employee not had access to a benefit plan, he would not have been able to financially access the cure required and in all likelihood would have gone untreated only to develop further life threatening conditions like liver disease or cancer of the liver.
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