Glossary of Stop-Loss Insurance Terms
General Key Terms
Laser:
A laser is when the stop-loss insurance carrier identifies a specific individual within a group who is expected to have high medical costs (often due to a known serious medical condition). For this individual, the insurance carrier sets a higher specific deductible than for the rest of the group.
When ERP offers “no new lasers at renewal,” it ensures stability in coverage by not introducing higher deductibles for specific individuals upon policy renewal, even if they develop high-cost conditions.
Stop-Loss Insurance:
Stop-loss insurance protects self-funded employers from catastrophic medical claims by reimbursing costs that exceed a predefined limit.
For instance, if an employee incurs $500,000 in medical costs and the company’s stop-loss deductible is $100,000, stop-loss insurance reimburses $400,000.
Aggregate Stop-Loss:
Specific Stop-Loss:
Distribution:
The sales and marketing activities involved in offering and selling stop-loss products to clients, such as employers or third-party administrators.
This includes responding to RFPs, building broker relationships, and educating clients on stop-loss options.
Reference-Based Pricing (RBP):
A healthcare cost containment strategy where employers pay for medical services based on a fixed percentage above Medicare reimbursement rates or another benchmark.
This helps reduce overall healthcare costs compared to traditional pricing models.
PPO (Preferred Provider Organization):
Third-Party Administrator (TPA):
Shared Risk/Reward:
PPO (Preferred Provider Organization):
Alternative Stop-Loss Arrangements
Captives:
A form of self-insurance in which a group of companies creates their own insurance entity to provide coverage for their collective risks.
ERP offers tailored captive programs to meet specific organizational, geographic, or industry needs.
Pooled Stop-Loss Programs:
Arrangements where multiple employers combine their stop-loss coverage into a single pool.
This helps spread risk and stabilize premiums without creating a separate insurance entity.
Level-Funded Products:
A type of self-funded health plan where employers pay a set monthly amount that includes expected claims costs, stop-loss premiums, and administrative fees.
If claims are lower than expected, the employer may receive a refund.
Transitional Stop-Loss Programs:
Contract Features and Administration
Advanced Funding:
Gapless Renewals:
Terminal Liability Option (TLO):
Run-In Contract:
Run-Out Contract:
Waiver of Actively-at-Work:
A provision maintaining coverage for employees not actively working due to disability, leave, or similar reasons.
This is especially important during transitions between carriers.
Plan Mirroring:
A feature where the stop-loss policy matches the terms of the employer’s self-funded health plan.
For example, if the health plan covers 80% of hospitalization costs, the stop-loss policy reimburses based on the same terms.
Contract Features and Administration
MGU (Managing General Underwriter):
Underwriting:
The process of assessing risk and determining appropriate premiums.
For stop-loss insurance, this includes analyzing claims history, evaluating demographics, and tailoring coverage options.