Core Idea: Program Reinsurance and Member OOP Protection

🧱 1. The Core Idea

There are two separate protections in the model, and they serve different audiences:

The member-facing protection is the plan's maximum out-of-pocket limit. Stop-loss is a program-level financing tool. It is good for members because it keeps the program viable, but it does not pay the member directly.

Since ClearHealth is an HSA-compatible, potentially self-funded product, stop-loss reinsurance is the key program-protection layer.

🛡️ 2. Stop-Loss Reinsurance Basics

A stop-loss policy reimburses your plan (not the member) once claims exceed a certain threshold.

Two primary layers:

So your plan — whether you’re the sponsor or an administrator — pays normal claims up to the attachment point. Once someone crosses that line, the reinsurer covers the rest.

Example Flow:

Let’s say:

• You have 500 covered members.
• Expected claims: $2,000,000 for the year.
• Specific stop-loss attachment: $50,000 per person.
• Aggregate stop-loss attachment: 125% of expected ($2.5M).

Scenario:

• Member A has $200,000 in hospital bills.

  • Plan pays first $50,000.
  • Reinsurer reimburses the next $150,000.

• Total group claims hit $2.6M.

  • Aggregate reinsurance reimburses the $100,000 above the $2.5M threshold.

This prevents financial ruin for a small plan. The member's protection still comes from the plan design: deductible, covered benefits, and maximum out-of-pocket limit.

🧩 3. Who Provides It

Stop-loss carriers and reinsurers specialize in this market:

They underwrite based on:

• Group size and demographics.
• Historical or expected claims (if available).
• Plan design (deductibles, OOP max, etc.).
• Network/pricing efficiency (e.g., reference-based plans get favorable rates).

⚙️ 4. How It Works Operationally

1. You create the plan — say, ClearHealth Basic with $2,000 deductible and $8,000 OOP max.

2. You (or an employer) act as the plan sponsor — paying claims directly or through a TPA.

3. You buy stop-loss coverage from a reinsurer.

   • Premium is typically $80–$150 per member per month for good-risk groups.

4. Claims process:

   • Claims < $50k → paid normally.
   • Claims > $50k → filed to stop-loss carrier for reimbursement.
   • Claims reconciled monthly or quarterly.

📈 5. Why It’s Perfect for a Transparent Plan

A reinsurance structure allows the program to:

• Operate lean (you’re not a fully licensed insurer).
• Keep premiums lower, since you only fund the expected claims + admin + stop-loss premium.
• Stay viable after large claims, while the plan's OOP maximum limits member exposure.
• Be flexible with innovation — Cost Plus, DPC, reference pricing, etc. — while keeping the program financially protected.

This is the model used by many startup “health plans” like Decent, Sidecar, or Taro Health: they’re technically administrators for a self-funded plan with stop-loss coverage layered behind it.

🧮 6. Typical Financial Structure

You could also structure risk corridors (e.g., reinsurer shares 50/50 between $50k–$150k, then 100% above).

🧠 7. Example for ClearHealth Basic

• Plan sponsor: ClearHealth Cooperative (self-funded pool).
• Third-Party Administrator (TPA): ClearHealth Admin Platform.
• Stop-loss reinsurer: Symetra or QBE.
• Specific attachment: $50,000 per member.
• Aggregate attachment: 125% of expected claims.
• Admin + stop-loss premium: approximately $130 per member per month total.
• Member deductible: $2,000.
• Plan pays 100% after deductible.

⚙️ 8. Implementation Options

You could launch in three stages:

🔍 9. Visual Summary

Member → HSA / Direct Pay → Provider
                      ↓
               Claim Submitted
                      ↓
        Plan/TPA pays up to $50,000
                      ↓
        Stop-Loss Reinsurer reimburses
                      ↓
              Plan stays solvent