 Decreases in individual stop-loss limits can lower overall costs
If you are focused on maximum, long-term cost management instead of the opportunity to win during a favorable claims year, you may benefit from a lower Individual Stop Loss (ISL) limit. In new client proposals where the ISL limit was lowered from $30,000 to $10,000, total costs have decreased by two to three percent. Although the lower ISL limit has a higher stop-loss premium, it also creates a larger decrease in claims funding, which results in an overall decrease in total costs.
A lower ISL limit means that funding will be driven primarily by stop loss premium and administrative expenses rather than claims expenses. This arrangement is ideal for you if you are looking at self-funding, focused only on total costs, (rather than the combination of fixed and variable costs) coming from a fully insured environment, or if you are a smaller group, but willing to reduce participation in claims management in exchange for lower total costs. |
