Premium allocation
In a fully insured plan, 100% of the premium dollar goes to the carrier, which pays the claims and manages the plan. In a self-insured plan, up to 87 cents of each dollar covers claims. The remainder covers reinsurance and administrative fees.
There are two types of reinsurance in self-insured plans:
- Specific Stop-Loss: Covers catastrophic risks, typically driven by a few members who account for most claims that are paid
- Aggregate Stop-Loss: Covers the overall liability of the plan and protects your maximum liability
High-cost claims
High-cost claims are frequently driven by serious conditions such as cancer, cardiovascular diseases and neonatal complications. The incidence of million-dollar claims has risen significantly due to advancements in medical treatments and medications. This has led to new products in the insurance market that help protect employers.
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