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Digital EditionMillion-Dollar Medical Claims Soar, Putting Employers Under Pressure
Million-dollar medical claims are surging at an alarming rate, with these high-cost claims increasing 29% in the past year and 61% over four years, according to recent analysis from Sun Life.
“Sun Life’s annual high-cost claims report illustrates the escalating nature of health care costs and the growing financial burden on employers and the health care system,” said Jen Collier, president of Health and Risk Solutions, Sun Life U.S.
The health care industry continues to witness a steady rise in catastrophic claims, with the frequency of million-dollar medical events reaching high levels.
According to Sun Life’s analysis, the fundamental drivers behind these claims have remained relatively consistent, with the same conditions dominating the top 20 list for over a decade. Only minor ranking adjustments occur year to year, typically influenced by new pharmaceutical treatments entering the market.
Cancer maintains its position as the undisputed cost leader, with malignant neoplasms generating $1.2 billion in spending across approximately 5,000 claims in 2024. This figure triples the expense of cardiovascular conditions, the second-highest category.
The pandemic’s impact is fading but still notable. COVID-19, which made an entrance into the top 20 conditions from 2021 through 2023, has now fallen off the current year’s list but continues to influence the four-year rankings. Analysts expect it to disappear entirely from long-term trend data next year.
Financial Pressures Intensifying for Self-Funded Employers
The escalation of high-cost claims presents mounting challenges for businesses operating self-funded health plans. The likelihood of encountering a stop-loss claim remains remarkably high, with 88% of employers experiencing one in any given benefit year between 2020 and 2023, Sun Life found.
More concerning is the growing severity of these claims. The analysis identified 47 members with claims exceeding $3 million—a substantial increase from 32 such claims the previous year. Among these, ten cases surpassed the $5 million threshold, with the highest single claim reaching an extraordinary $12.7 million.
Several factors are accelerating this trend. Health care costs consistently outpace general inflation, with hospital expenses growing particularly rapidly. Prescription medication prices continue their upward spiral, while potential tariffs on imported pharmaceuticals and medical supplies threaten to exacerbate pricing pressures further.
Strategic Approaches to Managing Catastrophic Claim Risk
As million-dollar claims transition from exceptional occurrences to increasingly common events, employers must adapt their risk management strategies accordingly. The analysis suggests the million-dollar threshold remains a crucial benchmark for claim severity, even as more cases push well beyond this marker.
The unprecedented frequency of multi-million-dollar claims underscores the importance of appropriate stop-loss coverage for self-funded employers. Without adequate protection, a single catastrophic case could devastate an organization’s finances and jeopardize the sustainability of their health benefits program.
Selecting appropriate deductible levels has become more complex yet more crucial than ever. Employers must carefully balance premium costs against potential claim exposure, considering both their risk tolerance and financial capacity to absorb large claims.
The analysis indicates that medical advancements, while beneficial for patient outcomes, will likely continue driving costs higher as new treatments emerge. This reality suggests employers should approach stop-loss coverage not merely as an insurance product but as a fundamental business continuity measure.
Access the full analysis from Sun Life here. &
