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The Longview Hospital contracted with the Carlyle Health Plan to provide inpatient services to Carlyle's enrolled members. Carlyle provides Longview with a type of stop-loss coverage that protects, on a claims incurred and paid basis, against losses arising from significantly higher than anticipated utilization rates among Carlyle's covered population. The stop-loss coverage specifies an attachment point of 130% of Longview's projected $2,000,000 costs of treating Carlyle plan members and requires Longview to pay 15% of any costs above the attachment point. In a given plan year, Longview incurred covered costs totaling $3,000,000.
With regard to the type of stop-loss coverage provided to Longview by Carlyle and to whether this coverage is classified as insurance or reinsurance, the risk transfer approach used in this situation can be described as:
Suggested Answer: C
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30 comments · newest first
AL
Alyce
11 months ago
I agree with Gabriele, reinsurance makes more sense here.
LA
Laurel
11 months ago
I think it's aggregate stop-loss insurance, not reinsurance.
DO
Donte
11 months ago
Not sure about this one, could it be specific stop-loss instead?
RO
Ronnie
11 months ago
Wait, so Longview pays 15% over the attachment point? That's surprising!
GA
Gabriele
11 months ago
This is definitely aggregate stop-loss reinsurance.
BI
Billi
12 months ago
I’m leaning towards specific stop-loss insurance because of the way the costs are structured, but I need to double-check my notes on this.
HE
Hester
12 months ago
I practiced a similar question where we had to identify types of stop-loss. I feel like the attachment point indicates it's aggregate, but I could be wrong.
AN
Annice
1 year ago
I think this is aggregate stop-loss insurance since it covers total costs above a certain point, but I might be mixing it up with reinsurance.
RO
Rolande
1 year ago
I remember discussing stop-loss coverage in class, but I'm not sure if this is aggregate or specific.
TA
Tawny
1 year ago
I've got this! The question is asking about the risk transfer approach, and based on the information provided, it sounds like Carlyle is offering aggregate stop-loss reinsurance to Longview. The attachment point and Longview's responsibility for 15% of costs above that point are the giveaways.
NA
Nancey
1 year ago
Okay, let me break this down. The key details are that Carlyle provided stop-loss coverage to Longview, with an attachment point of 130% of Longview's projected costs. I just need to figure out if that's considered aggregate or specific stop-loss, and whether it's classified as insurance or reinsurance.
DE
Delmy
1 year ago
Hmm, I'm a little unsure about the difference between insurance and reinsurance here. I'll need to think through the details of the coverage to determine which one it is.
NO
Noel
1 year ago
This one seems pretty straightforward. I think it's asking me to identify the type of stop-loss coverage that Carlyle provided to Longview.
EV
Evette
1 year ago
I see your point, Amos, but I still think A) is the best choice based on the information provided.
AM
Amos
1 year ago
I'm not sure, but I think it could also be C) specific stop-loss reinsurance.
CA
Catalina
1 year ago
This is a tricky one, but I'm leaning towards A) aggregate stop-loss reinsurance. The attachment point and the percentage of costs above that point make it sound like a reinsurance arrangement to me.
KA
Karma
1 year ago
Yeah, it definitely seems more like reinsurance than insurance.
KA
Kati
1 year ago
Yes, the terms of the coverage definitely align more with reinsurance than insurance.
JA
James
1 year ago
I agree, the attachment point and cost-sharing percentage point towards reinsurance.
DO
Doretha
1 year ago
I'm not sure, but it does seem like a reinsurance setup.
LA
Lawrence
1 year ago
I agree, the attachment point and cost percentage point towards reinsurance.
JO
Joaquin
1 year ago
I think it's A) aggregate stop-loss reinsurance.
LA
Lavera
1 year ago
I think you're right, it does seem more like a reinsurance arrangement.
NA
Naomi
1 year ago
I agree with Evette, because the attachment point is based on Longview's total costs.
ZO
Zona
1 year ago
Haha, this question is making my head spin! I'm just going to go with the flow and pick D) specific stop-loss insurance. Who knows, maybe I'll get lucky!
HE
Herminia
1 year ago
Hmm, I'm not so sure. The question mentions 'on a claims incurred and paid basis,' which makes me think it could be C) specific stop-loss reinsurance.
JU
Justine
1 year ago
I think the answer is B) aggregate stop-loss insurance. The coverage seems to protect Longview against higher than anticipated utilization rates, which suggests an aggregate approach rather than a specific one.
AR
Arlean
1 year ago
Yes, I think you're right. The coverage provided by Carlyle to Longview fits the description of aggregate stop-loss insurance.
BE
Bette
1 year ago
I agree, it does seem like B) aggregate stop-loss insurance would be the correct answer.
EV
Evette
1 year ago
I think the answer is A) aggregate stop-loss reinsurance.