Nick Tranguch, Chief Growth Officer
Cell and gene therapies are revolutionizing healthcare, offering the potential for curative treatment of rare and chronic conditions. From genetic disorders like spinal muscular atrophy to certain cancers, these therapies are often life-changing, but they come at a staggering cost. For employers, managing these expenses without compromising care has become a growing challenge.
As these high-cost therapies become more common, employers are looking for smarter, more flexible ways to manage risk. The answer for many? Moving to a self-funded or level-funded health plan with stop-loss coverage.
The Rising Cost of Breakthrough Therapies
Cell and gene therapies are not typical drugs; they’re highly specialized, often one-time treatments. Their costs reflect their complexity and transformative potential:
- Zolgensma (for spinal muscular atrophy): $2.1 million for a single dose
- Luxturna (for inherited retinal disease): $850,000 per treatment
- CAR-T therapies for cancer: often range between $370,000 and $500,000+
According to a recent report, over 60 new gene therapies are expected to launch globally by 2030, and U.S. spending on cell and gene therapies is projected to exceed $30 billion annually by 2030.
These unpredictable, high-cost claims can severely impact small and mid-sized employers with traditional fully insured plans.
The Smart Shift: Self-Funding + Stop-Loss Protection
That’s why more employers are turning to self-funded or level-funded health plans backed by stop-loss insurance, such as BSI CORE. This model offers greater flexibility and transparency, and with the right protections in place, significantly reduces financial risk. So, what exactly is stop-loss? Stop-loss is an employer’s financial safety net. It shields against catastrophic claims by capping the exposure on both individual high-cost claims and overall plan liability.
There are two main types of stop-loss coverage that protect employers from excessive healthcare costs under a self-funded plan: specific stop-loss and aggregate stop-loss.
- Specific stop-loss, also known as individual stop-loss, protects against very high claims incurred by a single person. For example, an employer might be responsible for the first $75,000 of an individual’s medical expenses, with the stop-loss insurer covering any costs beyond that threshold.
- Aggregate stop-loss provides protection when the total claims across all employees exceed expected levels. For instance, if total expected claims for a group are $1 million with a stop loss attachment point of 120% of expected, and actual claims reach $1.2 million, then the employer would fund the full $1.2 M. If actual claims reach $1.5M then the employer would fund $1.2M and the stop-loss policy would cover the amount above the attachment point.
Mandatory Stop-Loss Protections That Matter
While many employers purchase stop-loss coverage, not all stop-loss contracts are created equal, and why BSI’s CORE funding model focuses on long-term financial health, not just short-term fixes. The BSI CORE funding model provides three very important differentiators when it comes to stop-loss.
- No Lasers or Exclusions for Life, Not Just at Renewal – BSI requires stop-loss carriers to include no-laser provisions that are permanent, not just conditional at renewal. Lasering, assigning a higher specific deductible to known high-risk members, can leave employers vulnerable to exactly the kinds of high-cost claims they seek to protect against. Permanent no-laser language ensures employers aren’t blindsided by policy changes after a high-dollar diagnosis.
- Renewal Rate Caps – A renewal rate cap is a provision in a stop-loss contract that limits how much the premium can increase at renewal. It can seem like a win, but without a no-laser clause, it can be misleading. Stop-loss carriers can still “laser” high-risk individuals, assigning them significantly higher deductibles, which shifts the financial burden back onto the employer despite the capped renewal rate. In essence, a rate cap without a no-laser guarantee offers only partial protection and leaves employers exposed to the very risks they’re trying to mitigate. To ensure true financial predictability, both provisions must work together.
- Exclusive Partnerships & Aggregate Cap – When transitioning from a fully-insured model, it’s important for employers to understand that most self-funding includes a risk corridor of up to 25% above expected claims. This is often where employer groups encounter challenges, when claims exceed projections, the anticipated savings can disappear during a high-claims year. BSI CORE’s exclusive stop-loss partnerships offer aggregate caps as low as 10% above expected claims, significantly limiting upside exposure and allowing for more accurate budgeting and financial planning.
Together, these provisions set clear financial guardrails that help employers budget with confidence and avoid unexpected cost spikes due to high-risk members or catastrophic claims. One without the other is not enough. When combined, these protections ensure more stable and predictable plan renewals.
Balance Innovation with Affordability
In today’s healthcare landscape, access to advanced therapies is increasingly essential, but so is the ability to afford them responsibly. Employers no longer need to choose between high-value benefits and financial sustainability. Self-funded and level-funded health plans, when paired with comprehensive stop-loss protections, empower employers to manage and mitigate catastrophic risk, retain flexibility in benefit design, improve transparency and cost forecasting, and deliver on both employee care and fiscal responsibility.
Ready to future-proof your health plan?
Let BSI help you structure a funding strategy that protects your people, your plan, and your long-term goals, no matter what breakthrough comes next.