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Rising ACA Exchange Costs May Slow Interest in ICHRAs

by Inoventive Solutions
August 11, 2026

Individual coverage health reimbursement arrangements have attracted growing interest from employers looking for an alternative to traditional group health plans. However, a new survey suggests that rising Affordable Care Act Marketplace premiums following the expiration of enhanced federal subsidies may become one of the biggest obstacles to broader adoption.

The Employee Benefit Research Institute (EBRI) and Morgan Health surveyed nearly 1,000 employer benefits decision-makers and found that more than one-third were planning or evaluating an ICHRA. However, only 11% had implemented one, suggesting that many employers remained in the research stage rather than being ready to make the switch.

An ICHRA allows employers to contribute a fixed amount that employees use to purchase individual health insurance, usually through the ACA Marketplace, instead of participating in the employer’s group health plan. The arrangement gives employers predictable benefit costs while allowing employees to choose the plan that best fits their needs.

For 2026, employers can generally contribute up to $6,450 annually for self-only coverage and $13,100 for family coverage while meeting the ACA affordability standards. However, those amounts may not come close to covering premiums for many employees, raising concerns that they could face significantly higher costs if employers move from a group health plan to an ICHRA.

Employers’ biggest concerns

  • ACA Marketplace premiums. 85% of large employers, 81% of small employers offering health coverage and 79% of small employers without health coverage worried that individual-market premiums were too expensive for employees.
  • High out-of-pocket costs.84% of both large and small employers offering health coverage believed deductibles and other out-of-pocket costs could be too high for workers purchasing coverage on the exchange.
  • Marketplace quality concerns. Employers questioned whether individual-market provider networks and plan quality matched those of traditional group health plans.
  • Employees prefer group health plans. Employers said worker preference for traditional employer-sponsored coverage remained one of the biggest barriers to switching.
  • Limited knowledge of ICHRAs. Between 56% and 69% of employers correctly understood the basic ICHRA model, and 55% of small employers that did not offer health coverage were unaware that ICHRAs were even available.
  • Administrative complexity. Employers also expressed concerns about implementation, compliance requirements and ongoing administration.

Despite those concerns, employer interest continues to grow, according to the EBRI report. Employers with 100 or more workers expressed the strongest interest, with 62% saying they were likely to adopt an ICHRA within two years. Among small employers that did not offer health coverage, one in four said they would prefer offering an ICHRA rather than a traditional group health plan.

What employers said would increase adoption

According to the survey, employers said they would be more likely to offer an ICHRA if:

  • Provider networks in ACA Marketplace plans match the quality and choice available through group health plans (85%).
  • ICHRAs integrate with payroll systems (79%).
  • Employers could add supplemental benefit solutions (79%).
  • ICHRAs integrate more seamlessly with existing health benefits (78%).
  • More peer employers adopt ICHRAs (76%).
  • Federal or state tax credits encourage adoption.
  • The ACA Marketplace becomes more stable, affordable and predictable.
"Proposed
Uncategorized

Proposed Rule Would Make Electronic Health Plan Notices the Default

by Inoventive Solutions
August 4, 2026

The U.S. Department of Labor has proposed a rule that would make electronic delivery the default for delivering many required health plan notices, a move that could significantly reduce paperwork and administrative costs for employers.

For employers, the proposal could substantially reduce the time and expense of printing, stuffing and mailing millions of required benefits notices each year. Employees may also find it easier to access important plan information on their phones or computers whenever they need it.

If finalized, the rule could cut the number of paper notices mailed each year from roughly 1.9 billion to fewer than 200 million, saving employers an estimated $402 million annually, according to the department. The proposal would affect approximately 2.8 million ERISA-covered health plans serving about 155 million participants.

How it would work

The proposed rule would allow electronic delivery of many health plan disclosures required under ERISA, including:

  • Summary plan descriptions
  • Summaries of material modifications
  • Summary annual reports
  • COBRA election and continuation coverage notices
  • HIPAA special enrollment notices
  • Claims and appeals determinations, including benefit denials
  • Other required health plan disclosures under ERISA

Employees and beneficiaries would receive an e-mail or text notification when these documents are available online.  They would still have the right to request free paper copies or opt out of electronic delivery altogether.

Current electronic delivery rules date to 2002 and generally limit default e-delivery to employees who have work-related computer access or have consented to receive documents electronically. The proposed rule would establish a broader safe harbor reflecting how employees communicate today and extend e-delivery to a much larger share of the workforce.

What employers can do now

While the rule has not yet been finalized, employers can begin preparing by:

  • Reviewing how they distribute health plan communications,
  • Confirming employee e-mail addresses and mobile phone numbers are up to date,
  • Evaluating whether their benefits platforms can support electronic disclosures, and
  • Developing procedures for employees who prefer to receive paper notices.

If adopted, the rule would likely take effect for documents related to the 2028 plan year as it would be too late to implement for 2027.

"Benefits"/
Uncategorized

Benefits Disconnect: Employees Want More Support, Better Communication

by Inoventive Solutions
July 28, 2026

A new report finds that many employers believe they are doing a good job meeting workers’ benefits needs, but employees often see things differently.

The findings in Aflac’s “Workforces Report” highlight growing gaps in communication, financial preparedness and access to benefits information that could affect engagement and retention. The report identifies areas where employers can improve benefits delivery and increase benefit uptake and usage, which can help improve employee retention and attract new talent.

Report findings

  • The report found that 75% of employers believe employees are satisfied with their benefits packages, but only 65% of employees say they are.
  • One of the biggest disconnects involves communication and guidance during enrollment. Nearly 37% of employees said they want to speak with a real person when making benefits decisions, yet only 28% of employers offer that option.
    Similarly, 32% of employees want one-on-one access to a benefits consultant, but only 28% of employers provide it.
  • While 78% of employers believe their workers could handle a major unexpected medical bill, 44% of employees said they could not afford $1,000 in out-of-pocket costs for an illness or injury.
  • More than half of employees reported anxiety about health care costs not covered by insurance. 

Stress and burnout

The report points to rising levels of stress and burnout. Nearly three-quarters of employees reported moderate to very high stress. Burnout reached its highest level in six years.

Gen Z workers reported the highest burnout rates, surpassing millennials. Only 48% of employees said they are confident their employers care about their mental health, down from 54% a year earlier. 

Communication gaps may be contributing to the problem. Only 42% of employees said they fully understand their health insurance coverage, down from 49% the previous year.

Meanwhile, 69% said they want more information about their benefits. Although 46% of employers said they communicate about benefits throughout the year, only 34% of employees agreed that they receive year-round communication. 

Digital access has become increasingly important as well. More than four out of five employees said the ability to manage benefits online is very or extremely important, including 87% of Gen Z and millennial workers. However, 30% of employers still do not offer online benefits management tools. 

What employers can do

The findings suggest that employers do not necessarily need to offer more benefits, but they may need to make existing benefits easier to understand and use. Employers can improve engagement by:

  • Communicating about benefits year-round instead of only during open enrollment.
  • Providing access to benefits counselors or advisers.
  • Expanding digital enrollment and self-service tools.
  • Offering supplemental benefits that address financial concerns.
  • Investing in mental health and burnout prevention programs.
  • Regularly surveying employees to understand which benefits they value most.

Organizations that close these gaps may improve employee satisfaction, reduce stress and strengthen retention in an increasingly competitive labor market. Workers who are highly satisfied with their benefits are more than twice as likely to report high job satisfaction as workers who are less satisfied.

Employers’ top challenges in offering benefits

(Percentage ranking the issue among their top three challenges) 

  • Offering robust benefits while staying within budget or cost constraints: 54%
  • Understanding what employees want in benefits offerings: 56%
  • Determining the benefits that will meet employees’ needs: 48%
  • Finding time to dedicate to benefits selection and administration: 41%
  • Communicating and educating employees about benefits: 37%
  • Understanding options to control benefits costs: 32%
  • Managing benefits administration and regulatory compliance: 31%
"Men's
Uncategorized

Men’s Health at Work: How to Encourage Preventive Care

by Inoventive Solutions
July 21, 2026

For many men, taking care of their health often falls behind work and family obligations. But new research suggests employers have an opportunity to change that and improve workforce health, productivity and engagement in the process.

A recent eHealth survey of more than 900 men found that 42% skipped recommended medical care in the past year, while 82% said they prioritize their family’s needs over their own health. Sixty percent said they tend to put off medical care unless a loved one encourages them to seek treatment. 

Those findings should be a wake-up call for employers. Preventive care can help identify health issues before they become serious and expensive, yet many men are delaying routine screenings, annual physicals and mental health care.

One of the biggest issues is men’s perception of costs, with 33% saying they have delayed care due to cost concerns.

Education can help overcome those concerns. Employers can regularly remind workers about the preventive services available through their health plans, including annual wellness exams, cholesterol and blood pressure screenings, cancer screenings, mental health benefits and dental and vision care.

Men may also need encouragement to prioritize screenings. The eHealth study found that only 26% of men ages 30 and older knew that colonoscopy screenings are now generally recommended beginning at age 45. Awareness of recommended prostate screening timelines was also low. 

Mental health is another area where employers can make a difference. Men have historically underutilized behavioral health services, despite high rates of stress, anxiety and depression.

Employers can encourage utilization by reminding workers that counseling, employee assistance programs and telehealth services are confidential and covered under their health plans. Research has found that employer-sponsored mental health programs can improve productivity and reduce absenteeism while delivering measurable returns on investment. 

Routine dental and vision exams should also be part of any workplace wellness strategy. Oral health problems are associated with chronic health conditions, while untreated vision and hearing issues can affect quality of life, productivity and overall well-being.

What employers can do

  • Promote annual wellness exams and preventive screenings during benefits communications.
  • Consider offering rewards or recognition for completing health screenings or participating in wellness activities.
  • Provide clear explanations of no-cost or low-cost preventive services.
  • Send reminders during Men’s Health Month, Father’s Day and open enrollment.
  • Organize lunch-and-learn sessions or distribute informational materials about the importance of preventive care.
  • Encourage employees to establish a relationship with a primary care physician.
  • Promote mental health benefits, employee assistance programs and telehealth services.
  • Offer flexible scheduling or paid time off for medical appointments.
  • Include dental, vision and hearing exams in wellness campaigns.
  • Train managers to support work-life balance and normalize taking time for preventive care.

Encouraging preventive care today can help reduce future medical costs, improve workforce productivity and demonstrate that an organization values the well-being of its employees and their families.

"no
Uncategorized

Report: No Surprises Act Dispute Process Driving Costs for Planned Procedures

by Inoventive Solutions
July 14, 2026

A new study has found that physicians and hospitals are winning payment disputes for planned procedures like surgeries handled through the No Surprises Act dispute resolution system with awards that are sometimes more than 100 times typical rates.

These awards are adding “tens of thousands of, or in some cases even more than one hundred thousand, dollars in excess costs” per claim, according to the study by Elevance Health. This consequence of a law that was supposed to drive down costs could raise health insurance premiums paid by employers and workers.

Here’s a look at what’s driving these unintended outcomes.

How the law works

The No Surprises Act, which took effect in 2022, was designed to shield patients from so-called surprise medical bills.

A common example occurs when a patient schedules surgery at an in-network hospital but unknowingly receives care from an out-of-network anesthesiologist, radiologist, pathologist or other specialist involved in the procedure. Before the law, those providers could send patients large balance bills for charges not covered by insurance.

Under the No Surprises Act, patients generally pay only their normal in-network cost sharing in these situations. The health plan and out-of-network provider must then negotiate payment.

If they cannot agree after a 30-day negotiation period, either party can initiate the law’s independent dispute resolution process. In this process, an independent arbitrator chooses either the insurer’s payment offer or the provider’s.

The law anticipated that arbitration would be used sparingly and that awards would generally land near prevailing in-network rates. Instead, some studies have found that the system is being abused by providers who often receive awards that are significantly higher than customary charges.

Study finds large awards

Elevance reviewed more than 7,300 payment disputes involving planned procedures such as spine surgery, plastic surgery and colonoscopies that occurred at in-network facilities but involved out-of-network providers. Providers prevailed in nearly 90% of disputed claims.

Even more striking were the payment amounts. The average arbitration award was nearly $40,000. By comparison, the average in-network claim amount for the same services was approximately $1,614, the average contracted price was about $766 and the comparable Medicare payment was roughly $645. Some awards were more than 100 times typical reimbursement levels.

Growing concerns for employers

The findings come as the federal dispute resolution system is already struggling under the weight of millions of cases, far more than regulators anticipated.

Critics argue that the arbitration process may be creating incentives for some providers to remain outside insurer networks because the dispute process can yield significantly higher reimbursements than negotiated contracts.

For employers that sponsor health plans, the concern is that higher claim costs eventually find their way into premiums.

While workers are being protected from surprise bills at the doctor’s office or hospital, the cost of those protections may increasingly appear in employers’ health plan expenses and future renewal rates.

Federal regulators have adopted new rules intended to limit misuse of the process and ensure that only eligible claims enter arbitration. Whether those changes will reduce disputes and bring awards closer to market rates remains to be seen.

"fertility"/
Uncategorized

Proposed Rule Would Let Employers Offer Standalone Fertility Benefits

by Inoventive Solutions
July 7, 2026

Employers may soon have a new way to help employees access fertility treatments without incorporating those benefits into their primary health plans.

The Departments of Labor, Health and Human Services and the Treasury have proposed regulations that would create a new category of “limited excepted benefits” for fertility treatments under the Affordable Care Act. If finalized, employers could begin offering these benefits in 2027. The proposal is intended to expand access to fertility care while giving employers more flexibility in designing benefit programs.

Like standalone dental and vision plans, excepted fertility benefits would be exempt from many ACA requirements and certain Employee Retirement Income Security Act rules that apply to traditional group health plans.

How the benefit would work

The agencies say the proposal is designed to give employers flexibility to offer fertility benefits for both women and men and to tailor coverage to their workforce’s needs.

Services that may be covered include:

  • Diagnostic testing for infertility and reproductive health conditions
  • In vitro fertilization
  • Intrauterine insemination
  • Fertility medications
  • Cryopreservation and storage of eggs, sperm or embryos
  • Treatment of conditions such as endometriosis, blocked fallopian tubes, diminished ovarian reserve, male factor infertility and other medically recognized infertility conditions

To qualify, a fertility benefit would need to meet several criteria:

  • Traditional group health coverage must be offered, although employees would not have to enroll in it.
  • The benefit must be under a separate policy, certificate or contract and could not be integrated into the primary group health plan.
  • Substantially all benefits must relate to diagnosing, mitigating or treating infertility or infertility-related reproductive health conditions.
  • Services generally must be provided by licensed medical professionals.
  • The benefit would be subject to a combined lifetime maximum of $120,000 per participant and eligible beneficiary, indexed for medical inflation after 2028.
  • Employers would have to provide a clear written notice describing the coverage and explaining that it is an excepted benefit.

Areas under consideration

The agencies are seeking additional input that may shape the final regulations, including:

  • Whether the lifetime cap should instead be an annual limit with rollover provisions.
  • Whether the proposed $120,000 limit appropriately reflects the cost of fertility treatments.
  • Whether employers should be allowed to charge employee premiums, contributions or cost sharing for the benefit, similar to dental and vision plans.
  • Whether alternative notice requirements would better inform employees.
  • How quickly employers and insurers could implement the new benefit structure.

The takeaway

The public comment period closed July 13, and final regulations could arrive by year-end, allowing employers to begin offering these benefits in 2027.

In the meantime, employers may want to review their current health plan designs, evaluate whether employees are seeking fertility treatments and assess how a standalone fertility benefit could support recruiting and retention goals.

If the rule is finalized, the new option could give employers another tool to provide meaningful family-building benefits while maintaining greater flexibility over plan design and costs.

"Workers'
Uncategorized

Offering Group Health Can Affect Workers’ Comp Costs

by Inoventive Solutions
June 29, 2026

Employers who provide group health insurance and wellness programs to their employees tend to have lower overall workers’ compensation costs.

While the programs are separate, employees who have access to preventive care, chronic disease management and wellness resources are often healthier when an injury occurs. This may lead to fewer complications, faster recoveries and lower claim costs.

Studies have found that an employee’s overall health can affect how quickly they recover from a workplace injury. Conditions such as diabetes, hypertension, obesity, depression and substance-use disorders can complicate treatment, slow healing and extend the time an employee remains away from work. Consider the following:

  • The National Council on Compensation Insurance has found that workers’ compensation claims involving comorbidities generate roughly twice the medical costs of similar claims without those conditions.
  • Harbor Health Systems, after reviewing over 7,000 workers’ compensation claims, found that underlying health conditions were associated with longer recovery, more temporary disability days, increased litigation and higher surgery rates.

How health insurance affects workers’ comp costs

Employees with health insurance are generally more likely to schedule annual checkups, undergo preventive screenings, fill prescriptions and seek treatment when medical issues first arise.

That access to care may reduce the severity of chronic conditions before they complicate a workplace injury. Claims involving underlying medical conditions frequently require additional treatment, longer disability periods and more coordination among physicians.

Those factors can increase the likelihood of disputes over treatment, causation or return-to-work decisions, which may contribute to higher litigation costs.

On the other hand, a worker whose diabetes or hypertension is well managed may recover more quickly than someone whose condition has gone untreated.

Access to health insurance may also reduce situations in which employees delay seeking treatment because of cost concerns. And when employees have health coverage for non-work-related illnesses and injuries, there may be less financial pressure to characterize a nonoccupational medical condition as work-related simply to obtain care.

How wellness programs fit in

Employee wellness programs do more than improve overall health. They may also improve workplace safety, which in turn affects workers’ comp claims and costs.

Programs that encourage physical activity, healthy eating, tobacco cessation, stress management and behavioral health support can improve employees’ overall health. Healthy workers are often more aware of their actions and may recover more quickly from workplace injuries.

Telehealth services, employee assistance programs and mental health resources may help employees address health concerns before they become more serious.

Fatigue is another consideration. Employees who are chronically tired, stressed or dealing with unmanaged medical conditions may be more likely to lose focus or make mistakes on the job. Wellness initiatives that promote better sleep, stress reduction and overall health may improve alertness and reduce accident risk.

An investment beyond employee benefits

Many employers view health insurance primarily as a recruitment and retention tool, but it’s really a crucial part of a broader workforce risk management strategy.

Over time, healthier employees may experience fewer workplace injuries, recover more efficiently when accidents occur and generate less costly workers’ compensation claims.

"diabetes"/
Uncategorized

How Employers Can Fight the High Cost of Diabetes

by Inoventive Solutions
June 23, 2026

Diabetes is a devastating illness — and not just for those with the disease. Employers are also shouldering massive and increasing direct and indirect costs due to diabetes.

Diabetes afflicts more than 11% of the adult population, including about 6.3% of full-time workers and 9.1% of part-time workers. 

People with diabetes incur average medical expenditures of about $19,736 annually, with roughly $12,022 directly attributable to the disease, according to the National Institutes of Health. Out-of-pocket costs typically range from $3,300 to $4,600. Costs vary significantly based on whether complications have developed 

Those additional costs also drive group health insurance costs. On top of that, employees who are dealing with diabetes-related complications can also reduce productivity. 

Indirect costs

On average, diabetics miss 5.5 days more of work than other workers, according to Gallup estimates. That adds up to 45 million missed workdays, and productivity costs to U.S. employers of $4 billion.

For employers, these costs may represent just the tip of the iceberg. The Centers for Disease Control estimates that more than 114 million adults in the U.S. — a third of the workforce — have undiagnosed diabetes or prediabetes. 

What can employers do?

With so much at stake, a robust workplace program to fight diabetes can generate a significant return on investment. 

The American Diabetes Association estimates that preventing or delaying the onset of diabetes in just one prediabetic employee can generate more than $50,000 in direct and indirect cost savings over five years.

The CDC recommends that employers design wellness programs that specifically target improvements in the following areas: 

  • Exercise and activity levels
  • Smoking cessation
  • Hypertension reduction
  • Blood cholesterol reduction
  • High blood glucose reduction
  • Weight/obesity

There also are a number of measures employers can take to help mitigate some of the costs to the organization.

Offer ongoing counseling with professional dieticians. Employees who regularly meet with dieticians who can help them set small, manageable goals for themselves, make significant and measurable health improvements, according to the HCCI. The research found that they lost 5.5% of their body weight and reduced blood glucose levels. 

Start a walking club. The American Diabetes Association’s “Stop Diabetes @ Work” program recommends that employers encourage company walking clubs to attend diabetes walk-a-thons like “Step Out: Walk to Cure Diabetes,” or host a community “Walk to Cure Diabetes.”

You can find resources, including posters, articles, training plans and walking guides, at www.diabetes.org.

Encourage self-assessment and screening. According to the CDC, 30% of people with diabetes aren’t even aware of it. Workplace screenings are easy and effective. Many employers provide incentives for workers to participate via reduced insurance copays, or even cash payments. 

All screenings should be confidential and employers should not penalize employees who have diabetes, as this could violate the Americans with Disabilities Act. 

Encourage smokers to quit. Diabetics who smoke have far higher medical costs on average than non-smoking diabetics or non-diabetic smokers. Discouraging tobacco use can pay off in the long run.

"lifestyle
Uncategorized

Lifestyle Spending Accounts Gain Traction as Employers Seek Flexible Benefits

by Inoventive Solutions
June 16, 2026

As employers continue looking for ways to support a multigenerational workforce with diverse needs, lifestyle spending accounts are emerging as a popular addition to employee benefits programs. 

Originally viewed as an extension of wellness programs, LSAs are broader and more flexible. Rather than focusing solely on fitness or preventive care, these employer-funded accounts allow workers to use allocated funds for services tied to physical, emotional, financial and personal well-being.

For human resources and benefits managers, the appeal lies in personalization. Workers at different life stages often value different forms of support.

How LSAs work

An LSA is generally funded entirely by the employer. The company determines how much employees receive annually and what expenses qualify for reimbursement.

Unlike health savings accounts or flexible spending accounts, LSAs are not governed by strict federal rules that limit eligible expenses. That gives employers significant flexibility in designing programs that align with workforce needs and company culture.

Employers may structure the benefit as a yearly allowance or monthly stipend. Employees typically submit receipts or proof of purchase through a reimbursement platform administered internally or by a third-party vendor.

Eligible expenses vary widely by employer, but common categories include:

  • Gym memberships, fitness classes and exercise equipment
  • Mental health apps, meditation subscriptions and life coaching
  • Financial planning, tax preparation and student loan assistance
  • Childcare, elder care and fertility-related services
  • Professional development courses and certifications
  • Nutrition counseling and wellness coaching
  • Home office equipment or commuting costs

Some employers also create broad “lifestyle” categories that allow employees to choose expenses they believe improve their well-being.

Advantages for employers

One of the primary advantages of LSAs is flexibility. Traditional benefits programs often take a one-size-fits-all approach, while LSAs allow staff to select benefits that matter to them.

Employers may also see advantages in recruitment and retention as workers increasingly evaluate employers based on overall well-being support. Offering flexible benefits can demonstrate that a company understands the varied pressures employees face inside and outside work.

One bonus for employers is that they only pay when an employee submits a reimbursement request for an approved expense. Many workers may never use the plan, and some may not use the full amount allocated to their account.

Administrative complexity may also be lower than that of tax-advantaged accounts because LSAs generally involve less regulatory compliance.

Potential drawbacks

Despite their flexibility, LSAs come with challenges:

  • Because the accounts are taxable, employees generally must pay income taxes on reimbursements they receive. Employers must also decide how the benefit will be taxed and reported through payroll.
  • Cost control can also become an issue if programs are not carefully structured. Employers need clear guidelines on eligible expenses, reimbursement limits and documentation requirements.
  • Another challenge is communication. Employees may not fully understand how the program works or what qualifies for reimbursement. Without education and regular reminders, participation rates may lag.

Regardless, LSAs are increasingly being viewed as a way to provide more personalized employee support that complements traditional health and wellness benefits.

"high-cost
Uncategorized

Stop-Loss Insurers Increasingly ‘Lasering’ High-Cost Claimants

by Inoventive Solutions
June 9, 2026

As million-dollar health insurance claims continue to surge, stop-loss insurers that provide excess coverage for self-insured employers are increasingly using a controversial underwriting tactic to limit coverage for high-cost claimants.

The tactic, called “lasering,” entails applying a higher deductible or exclusion to a specific individual or condition, like heart failure or cancer. Instead of the normal attachment point applying uniformly across the group, the insurer carves out higher-risk individuals and shifts more financial responsibility back to the employer.

The trend is accelerating as more employees and dependents generate extremely costly claims tied to cancer treatments, specialty drugs, complex surgeries and chronic illnesses. According to a recent analysis by Sun Life, claims exceeding $1 million increased 29% between 2024 and 2025 and have surged 61% over the last four years.

That growth is reshaping the stop-loss market and creating new challenges for employers that self-fund their health plans.

How lasering works

Under a traditional stop-loss arrangement, an employer may absorb the first $100,000 or $150,000 of an employee’s claims before stop-loss coverage begins reimbursing expenses above that threshold. The stop-loss carrier reimburses the employer’s plan, not the employee.

But with lasering, a stop-loss carrier may impose a $500,000 deductible on an employee undergoing cancer treatment, instead of the same attachment point used for all other workers on the plan.

There are several types of stop-loss lasers:

Standard lasers — Apply a higher attachment point to all claims associated with a specific individual.

Contingent lasers — Apply only to claims tied to a specific diagnosis or condition, such as cancer or diabetes.

Limited contract basis lasers — Restrict the time frame during which certain claims are covered.

Exclusion lasers — Remove a specific individual from stop-loss coverage entirely.

What’s behind the trend

Stop-loss carriers say the growing use of lasering is being driven by rising claims severity and improved predictive analytics.

Advanced claims modeling tools now allow insurers to analyze medical histories, pharmacy utilization and treatment trends with far greater precision. As a result, insurers are requesting more detailed claims information during underwriting and using that data to identify participants likely to generate catastrophic claims.

Employer effects

For employers, lasering may reduce stop-loss premiums, but it can also create substantial financial risks if a lasered employee incurs major expenses. Employers may unexpectedly assume hundreds of thousands of dollars in additional costs for a single claimant.

As a result, some self-insured employers may have to set aside more in reserves and consider increasing employee cost-sharing to account for the added risk.

Also, employers and brokers are increasingly negotiating for “no new laser” provisions during renewals. These provisions limit an insurer’s ability to add new lasers during or after renewal based on emerging claims.

There are other ways to prevent or reduce the need for a laser. We can help you understand your options, workforce demographics, medical claims history and potential financial liability.

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