Traditionally a funding option preferred by large employers, self-insured health plans are becoming more and more common for small- and medium-sized companies as well. According to a Kaiser Family Foundation study, 60% of American workers covered by employer-sponsored health insurance are in self-funded medical plans.

And, in a survey of health insurance executives conducted by Munich Health North America earlier this year, 82% of those surveyed have experienced a growing level of interest among employers in self-funding their group health insurance plans over the past 12 months, with nearly one-third (32%) stating that interest has increased "significantly."

Self-insurance has the potential to lower premiums and improve cash flow, but it also opens employers up to greater financial risk. Guardian recently unveiled a stop-loss insurance product for self-funded employers that aims to mitigate financial danger by offering protection against cataclysmic or unpredictable claims.

Ray Marra, vice president of group products at Guardian, says the insurance has no minimum threshold before a reimbursement is paid and can offer proper coordination with an employer's medical carrier or third-party administrator.

"Health care costs continue to rise, and as employers look at ways to combat that, there are a number of tactics they might take," Marra says. "One of those tactics is to go self-funded, and obviously for self-funded [employers], they need to build some high-end claim protection for themselves, especially in light of changes with the Affordable Care Act when there are no more lifetime maximums in health plans. That's all the more rason for an employer who's gone self-funded to need and want stop-loss coverage."

Plan providers can set their own stop-loss deductible level - examples range from $1,000 to $30,000 - but it's entirely up to benefits administrators. There are examples, Marra says, "where individuals have incurred well over $1 million in claims costs," which could be devastating to firms without stop-loss protection.

"It doesn't happen every day, but it does happen," he says. "And here's an opportunity to budget a set amount of money to protect yourself from those unpredictable, potentially catastrophic, financial events."

Guardian's stop-loss insurance product has been approved in 23 states, with nationwide approval expected by mid-2014.

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