Healix Health Services has introduced a new stop loss model designed to protect its clients’ corporate healthcare trust funds from the impact of high cost claims.
Healix already offers aggregate stop loss insurance, which provides insurance protection where total claims exceed the estimated claims fund. This is usually activated when claims reach 100% or 125% of the fund, although different levels can be agreed.
Now, in order to help protect clients’ funds against the impact of individual high cost claims, Healix has added £100,000 specific stop loss insurance to the contract. For any individual claim exceeding £100,000, costs above £100,000 will be met by an insurance policy rather than by the trust fund.
Healix says this means clients’ healthcare trust funds are not only protected from total claims exceeding the estimated claims fund, but also from any individual high cost claims making a big dent in the fund. Furthermore, with the claims fund being less susceptible to spikes from high cost claims, the estimated claims fund required could be reduced for future years.
The cover is underwritten at Lloyd’s. All stop loss premiums attract IPT (whereas payments into healthcare trusts generally do not).
What They Say
Sales director of Healix Health Services, Richard Saunders, said: “The healthcare market has seen a significant uplift in cancer claim costs over the last 27 months.
"The average cost of a cancer claim three years ago was £50,000, but now insurers are regularly seeing cancer claims breaching £100,000, £200,000 and £300,000.
"These high claims can seriously affect the long term sustainability of any healthcare scheme, so we have created a ‘future proofing’ model for our healthcare trust clients, which reduces the impact high cost claims could have on their claims funds."
What We Say
"Healthcare trusts have been around for more than a generation now and are a proven way of getting PMI style benefits, with payments in largely avoiding Insurance Premium Tax (IPT). With IPT now at 12%, that can be a considerable saving, and enable employers to help more employees or provide more cover for the same net cost.
"However, a run of larger claims can make the process a very expensive one, compared to the security of having fully insured benefits. To counter that, healthcare trust providers will offer aggregate stop loss insurance so, if claims exceed say 125% of what you’ve budgeted for, the insurance kicks in and pays everything above that.
"Increasingly though, claims can be within acceptable levels overall but just one or two individual claims can have a dramatic effect. These days, such claims are usually cancer related and new treatments and drugs can result in single claims being into six figures.
"The solution to that is specific stop loss insurance, which pays out on individual claims if they exceed a pre-set figure. For very large employers, such claims may be an acceptable risk, but healthcare trusts can now be used by much smaller employers (from just 100 employees, for Healix’s 100 Scheme) so the need for specific stop loss insurance looks certain to grow further.
"All stop loss insurance premiums attract IPT but that’s likely to be a very small part of the employer’s overall spend, so a healthcare trust is still an attractive option overall – just now with less risk of one or a few very large claims upsetting careful planning and financial budgeting."