Self-insured? 4 ways Finance can negotiate a better stop-loss contract

More and more employers are opting to go the self-insurance route with their health care.
That’s especially true with the small/mid-sized firms, a group that had traditionally shied away from self-insurance. For self-insurance to work, a solid stop-loss (insurance that allows employers to limit their losses to a set dollar amount) contract is a must.

Timing and leverage

To that end, Bob Foley, Mutual of Omaha’s director of employee benefits, offered some invaluable info on negotiating a favorable stop-loss contract during a recent presentation.

According to Foley, negotiating the best contract is all about timing and leverage. Here are four tactics:

1. Start early. Firms should start negotiations for a new stop-loss contract 18 months before their current one ends.

2. Leverage the competition to your advantage. Ask your carrier for a better deal that’s effective immediately and let the carrier know in no uncertain terms that you’re ready to switch in order to get the best deal.

3. Be ready to act. During the negotiation, offer to extend the contract to secure the best deal.

4. Avoid long-term commitments. With the market changing so quickly, Foley urges firms not to lock in a contract for more than three years.

Critical additions

When it comes to the nuts and bolts of a stop-loss contract, employers should be sure to get premium rebates for the good years. Also, the following very specific value-added services or contract riders can protect your firm:

• an air ambulance rider, and
• a transplant network services rider.

Because the ACA eliminated caps on emergency services and air ambulance providers don’t negotiate with networks, this is an area that’s ripe for costly problems.

Based on “Reducing the Cost of Health Plans,” by Bob Foley, presented at 2017 Mid-Sized Retirement & Healthcare Plan Management Conference in Phoenix