Blog: The 10 costliest catastrophic claims for self-insured employers

What medical conditions are most likely to bankrupt a self-funded employer? Not surprisingly, cancer and several other costly, complicated diseases.

Self-insured employers directly pay for their employees' medical costs, and they hire health insurers or third-party administrators to handle the back-end work. This differs from fully insured employers, who pay health insurers to take on all the risk and benefits services of their employees.

Self-insurance is inherently risky since employers are on the hook for paying all bills and could receive unexpectedly high claims at any time. To guard against catastrophic medical claims, self-insured employers buy stop-loss coverage where a carrier covers all costs after a certain threshold is met.

Sun Life Financial is one company that sells stop-loss insurance to employers. It recently combed its stop-loss claims from 2011 to 2014 and found that 10 medical conditions accounted for more than half of the $2.1 billion it paid out to policyholders. The top three conditions—malignant neoplasms, leukemia/lymphoma/myeloma cancers, and severe kidney disease—cost Sun Life $699 million over that four-year period alone.

Caring for cancer patients is one of the most expensive components of the U.S. healthcare system due in large part to costly cancer drugs. However, experts have been demanding more rigorous evaluations of those price tags.

Sun Life said intravenous medications were a significant factor in the high costs of its claims and that cancer “will remain the leading medical condition” for catastrophic payouts to employers in the near future.

The other top claims conditions at Sun Life included conditions present at birth, premature births, congestive heart failure, cerebrovascular disease, lung collapse or failure, complications from surgeries and other care, and septicemia. Many of those conditions account for the costliest hospitalizations, according to data from the Agency for Healthcare Research and Quality (PDF).

Heart, lung and other organ transplants were the 11th-highest catastrophic claims condition and have risen in the past two years, “which could be the beginning of an upward trend,” according to Sun Life.