EP479: Part 2. What Could Go Wrong Covering High-Cost Claimants With Stop-Loss Reinsurance?

Stop-Loss Reinsurance Pitfalls: What Self-Insured Plan Sponsors Need to Know

Stop-loss carriers shoot for 30 to 40% margins on the policies they sell. That figure came from the CEO of a large stop-loss carrier, in what Andreas Mang describes as a moment of weakness. If you're a self-insured employer and you haven't been actively marketing your stop-loss coverage every year, you may be paying hundreds of thousands — or millions — of unnecessary dollars for too much insurance, or the wrong kind.

In this second conversation, Stacey Richter speaks with Andreas Mang, Senior Managing Director at Blackstone and CEO of Equity Healthcare, and Jon Camire, Managing Director, CFO of Equity Healthcare, and actuary, about the advanced considerations in stop-loss coverage for high-cost claimants — the contract provisions most plan sponsors overlook, the eligibility gaps that surface at the worst possible moment, and how to use a panel approach to let market forces work in your favor.

WHAT YOU'LL LEARN ✅ Why contract type matters more than price: the difference between a 12-15 and a 12-24 runout period — and why a plan with 200 employees could find itself fully on the hook for a NICU baby born December 30th if it chose the cheaper option without understanding what it was buying

✅ Four contract provisions to negotiate or demand: no new lasers once the policy is written, renewal caps on year-over-year premium increases, mirroring provisions (the stop-loss contract must mirror the medical plan's coverage), and an adequate runout period

✅ Why eligibility audits are non-negotiable: stop-loss carriers are meticulous about eligibility when a million-dollar claim comes in — and across dozens of companies, Jon Camire finds that 2 to 3% of dependents on a plan are typically ineligible

✅ The most common mistake: being either too conservative (overpaying year after year for coverage you don't need) or too price-focused (buying gaps into your coverage) — and why stop-loss decisions are too often the last, most rushed purchase in an already exhausted benefits cycle

✅ What a panel approach is and why it works: a panel of 9 to 10 stop-loss carriers competing annually for a large block of premium keeps the pencil sharp, ensures consistent contract terms, and captures carriers that may be aggressive in the market in a given year

✅ Know how everyone is getting paid — your consultant, the collective, and the stop-loss carrier — because stop-loss commissions are not reported on 5500s, and there is room for questionable behavior that won't surface unless you ask

WHY THIS MATTERS Stop-loss coverage is a risk management tool first and a cost center second — but too many plan sponsors treat it as the last line item in an already locked budget. For clinical organizations serving high-cost claimants, this episode matters in a different way: it explains how your plan sponsor customers ensure they can pay you when a catastrophic claim arrives, and what happens when those structures have gaps. This is the 201-level conversation; EP478 is the 101.

=== LINKS === 🔗 Show Notes with all mentioned links: https://cc-lnk.com/EP479

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0:00 Introduction

07:47 What are the best practices for plan sponsors to use for stop-loss coverage?

10:11 What are the "unknown unknowns" within stop-loss coverage?

15:25 What are some policy provisions that plan sponsors should be aware of?

19:02 Why is it so important to do eligibility audits?

20:41 What are some common mistakes made with stop-loss coverage among the self-insured?

23:21 What's a panel approach, and why is it important for negotiating stop-loss coverage?