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Stop-loss: The market plumbers

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Some of the bigger small employers are thinking of stop-loss programs as a health benefits life raft.

Vendors hope to earn a profit by making the life raft more comfortable.

The Patient Protection and Affordable Care Act (PPACA) imposes many new requirements on fully insured group health plans on employers of all sizes. The law calls for “large employers” to be offering affordable minimum essential coverage (MEC) to 70 percent of their full-time workers already or else face the possibility of paying a big penalty in 2016.

See also: In PPACA World, what counts as real coverage?

If the Obama administration sticks to the current implementation schedule, smaller employers could have to comply with the MEC system rules in 2016.

The current size cut-off for “applicable large employers” is 100. The cut-off could fall to 50 next year.

Many PPACA rules apply to self-insured plans as well as insured plans, but some important rules, including rules that require affected plans to offer a standardized essential health benefits (EHB) package, apply only to insured plans.

In the past, most companies that self-insured were large. Today, some brokers see self-insuring as a way for companies with as a few as 20 employees to get more control over the benefits program and reduce mandate-related costs. Small employers generally manage the risk associated with sponsoring a small self-insured plan by buying stop-loss insurance, or insurance for health plans.

Some strong supporters of PPACA see the prospect of employer flight to stop-loss plans as a threat to the stability of the risk pool in the fully insured market.

In Maryland, for example, lawmakers are debating H.B. 703, a bill could increase the minimum stop-loss attachment point, or deductible, for an individual enrollee to $40,000, from $10,000 today.

See also: 5 Labor Department PPACA audit insights

For now, however, the market looks to some as if it could be poised for rapid growth, and companies are trying to develop services that will make stop-loss easier to use.

For a look at two recent stop-loss market infrastructure announcements, read on.

Flowchart

Collective Health

Collective Health, a California company that runs an administration platform for self-insured employers in California, has raised $38 million in expansion money from a group of investors led by Founders Fund and NEA.

The company is saying it will use cloud-based technology and data science to “democratize access self-insurance,” with money from some of the same investors that have backed SpaceX.

The company’s website features a Wired story with the headline, “The Next Big Thing You Missed: A Startup’s Plan to End Health Insurance Tyranny, With Slick Tools.”

Pills

Truveris

Truveris is trying to make buying setting up a self-insured plan easier by offering an automated quote engine for pharmacy stop-loss insurance. 

Truveris, the company that runs the RxChoice pharmacy benefits exchange, is now offering the stop-loss insurance through the system.

Fairmont Specialty helped Truveris set up the program, and U.S. Fire Insurance Company is the underwriter. 

Brokers and advisors can use the system to get pharmacy stop-loss quotes in about 15 minutes, while shopping for pharmacy benefit manager (PBM) manager services, Truveris says.

The traditional process for getting pharmacy stop-loss insurance can take several weeks, the company adds.

See also: New hepatitis C drug to cost $94,500 per patient

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