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Digital EditionMedical Stop Loss Claims Above $2 Million Have Tripled Since 2020, Report Finds
Medical stop loss claims exceeding specific deductibles by at least $2 million have risen 213% since policy year 2020, while claims exceeding deductibles by at least $500,000 are up 114% over the same period, according to the 2026 Annual Market Report from Tokio Marine HCC – A&H Group.
The report draws on six years of proprietary claims data and identifies a broad array of cost drivers — from complex cancer treatments and neonatal care to gene therapies and provider consolidation — pushing the stop loss market into what the insurer describes as a tightening rate environment expected to persist through at least 2027.
Cancer, Neonatal Care, and Nervous System Conditions Lead Costs
Cancer remains the dominant driver of stop loss exposure, accounting for just over 35% of total paid claims in 2025 and growing as a share over the past four years as more advanced treatments are deployed. Cardiovascular diseases rank second at nearly 13% of all claims paid. Together, the two categories account for close to 48% of total costs, the report said.
Nervous system disorders — which have ranked consistently in the top 10 diagnostic categories — jumped to third place in 2025, a shift the report attributes in part to gene therapies and specialty drugs. The category is expected to generate continued high costs in 2026 due to Itvisma, a gene therapy approved in November 2025 for spinal muscular atrophy.
Perinatal and neonatal conditions ranked seventh in total costs but produced the largest single reported claim in 2025 at $8.93 million, the report said. Plan members under the age of 10 account for 39% of all claims exceeding $1 million, more than three times any other 10-year age range, with the majority of those claims originating from children under age 1.
The report identifies maternal advanced age, diabetes, and obesity as risk factors contributing to premature birth and high-risk pregnancies, including in women under age 26.
Specific Deductible Strategy Takes on Greater Importance
Tokio Marine HCC – A&H Group highlighted what it characterizes as a structural vulnerability in how many employer groups manage stop loss deductibles. Half of the groups analyzed did not increase their specific deductible even once across four consecutive renewal opportunities between 2022 and 2025.
The data show a clear inverse relationship between deductible increases and rate increases: groups that raised their specific deductible four times experienced average annual rate increases of 2%, while groups that never raised their deductible saw average annual increases of 11%.
The report explains the mechanics behind this pattern. When a claim has already breached a specific deductible, all of the medical and pharmacy cost trend flows entirely to the stop loss carrier’s layer, amplified by a leveraging effect. In one illustrated example, a 10% first-dollar medical inflation rate translated to a 25% trend in the stop loss layer for a claim already above the deductible, while the employer’s plan layer saw 0% trend. The report states that increasing the specific deductible by at least the rate of first-dollar trend will mitigate the leveraging impact and prevent large rate increases over time for employers.
A Widening List of Structural Cost Pressures
Beyond individual claim categories, the report identified a range of systemic forces compounding stop loss costs in 2026. These include:
- The proliferation of FDA-approved cell and gene therapies.
- Provider consolidation giving health systems greater leverage in commercial contract negotiations.
- And AI-driven tools being used to maximize provider reimbursements.
The report also points to anticipated reductions in federal funding for government health programs, which it expects will shift costs to employer-sponsored plans as medical providers seek to replace lost revenue. Continued growth in Medicare Advantage enrollment — which typically reimburses at lower rates than traditional Medicare — is identified as another factor likely to accelerate cost-shifting to employers.
Mental and behavioral health claims, while still a small share of total stop loss costs, have seen total costs rise 123% since 2020 (as of 2024), with frequency identified as the primary driver, the report said.
Obtain the full report here. &
