If you’re responsible for monitoring your employee benefits plan costs, you’re undoubtedly aware of the rapid increase in health insurance expenses, especially during high-claims years. According to the International Foundation of Employee Benefit Plans, healthcare costs are projected to rise by 8% next year (1), primarily due to catastrophic claims, specialty drugs, and rising medical provider fees.

This escalation places a heavy burden on employers. High-cost claimants significantly impact medical plan costs, creating immense financial pressure for employers. Factors contributing to this rise include exorbitant drug prices and the increasing frequency of high-cost medical events. Consequently, many small to midsize employers are seeking alternatives to minimize costs and safeguard their business, leading to the growing popularity of self-funded employee benefits plans like BSI CORE.

Embracing Self-Funded Plans
Many small and midsize employers are turning to self-funded insurance plans, similar to those used by over 74% (2) of large corporations for decades. These plans provide employers with greater control and customization of their benefits policies compared to traditional fully-insured group health plans.

However, self-funding inherently means that employers directly cover healthcare benefits. This is where stop loss insurance becomes essential. Stop loss insurance caps an employer’s out-of-pocket expenses at a predetermined amount. Should costs exceed this threshold, the stop loss policy covers the additional expenses, providing a safety net for employers.

Pooling Resources & Sharing Risk
Self-funded insurance plans, particularly those formed within a consortium, allow employers to pool their resources and share risk. This approach is especially beneficial for small and mid-sized companies that may lack the scale to self-insure independently. By self-funding through a consortium, businesses gain flexibility and control over their plans, leading to substantial cost savings.

Stop loss coverage is a critical element of self-funded health insurance plans, protecting against claims that exceed set limits. Within a consortium, the risk of catastrophic claims is distributed among all members, reducing volatility and overall costs. For small and midsize businesses, stop loss insurance safeguards financial reserves and enhances profitability.

Why Midsize Companies Should Consider BSI CORE
For nearly a decade, BSI has provided small and midsize employers with innovative alternatives to conventional health benefit products through its CORE self-funding model. Many clients benefit from BSI CORE, a preferred stop loss, self-funded platform that offers enhanced purchasing power and robust risk protection compared to standalone self-funding or being fully insured.

BSI CORE caters to mid-market employers (fewer than 2,500 employees) by delivering the same claims data, services, and risk protection enjoyed by larger clients. By leveraging the collective purchasing power and actuarial credibility of a consortium of over 1,200 employers and 185,000 members, BSI couples these advantages with its service model and actuarial expertise to offer data-driven strategies and guidance unheard of in the industry.

Key Advantages of BSI CORE

• No future lasers
• No future exclusions
• 25% capped stop loss rate increases

These features, combined with BSI’s meticulous management of expenditures, enable BSI CORE clients to consistently achieve better financial outcomes than those who are fully insured or utilizing standalone self-funding models. For example, before joining CORE, our client, Schlouch Inc., received a renewal with stop loss coverage that included “no lasers,” but lacked a rate cap. BSI was able to negotiate a new stop loss proposal featuring a $250,000 lower laser, reduced maximum liability, and enhanced protections. This resulted in total annual savings of $1,135,253 and a significant reduction in liability. The CORE proposal also provided long-term benefits, including a commitment to NO NEW LASERS EVER and RATE CAPS for the life of the contract, ensuring both immediate savings and ongoing protection against future risk.

In summary, stop loss insurance is a vital tool for managing financial risk in self-funded employee benefits plans. By partnering with BSI CORE, employers can enhance their protection while reaping the benefits of a more flexible and cost-effective health insurance solution.

(1) https://blog.ifebp.org/employers-project-8-rise-in-health-care-costs-for-2025/#:~:text=U.S.%20employers%20project%20a%20median,a%207%25%20rise%20in%20costs.

(2) https://www.ebri.org/content/summary/new-research-finds-increasing-number-of-self-insured-health-plans-in-small-and-medium-sized-businesses-but-a-decreasing-number-in-large-companies-since-passage-of-the-affordable-care-act-of-2010#:~:text=Large%20firms%20