Sun Life’s 2026 High-Cost Claims and Injectable Drug Trends report, released May 21 and drawn from more than 70,000 high-dollar claims across roughly 3,300 self-funded employers, records a shift that matters more to attachment-point math than the usual gene-therapy headline: orthopedic and musculoskeletal (MSK) conditions have moved into the top three high-cost categories for the first time. Cancer still leads, generating about $1.2 billion across roughly 5,000 claims, but MSK now sits alongside it near the top, at $1.18 billion of total spend built from a much lower average cost of about $116,000 per claim. Million-dollar-plus claims are up 46% since 2022. This is a frequency category wearing a severity label.
Who it affects
This lands squarely on self-funded employers and the stop-loss layer that backs them, and the exposure skews toward plans with older or physically demanding workforces: manufacturers, construction firms, public entities, transit and utility employers, and hospital systems carrying their own employee health risk. Unlike a single $3.6 million Elevidys dose, which Sun Life flags among the drivers of its costliest cases, MSK does not arrive as a lottery ticket. It arrives as volume: spinal fusions, joint replacements, and complex orthopedic surgery, often stacked with the comorbidities (obesity, diabetes, cardiovascular and kidney disease) that Sun Life identifies as the connective tissue among its most expensive claims.
The reserve mechanism: a thicker band, not a taller spike
The lever here is attachment adequacy and the shape of severity in self-funded health IBNR. A $3 million gene-therapy claim is a tall, narrow spike; it either pierces the specific attachment or it does not, and one or two a year swing the whole layer. MSK behaves differently. It thickens the band just above the specific attachment point, the $250,000 to $1 million range where aggregating specifics, corridors, and laser provisions actually decide who absorbs the claim. A plan that set its specific attachment on the assumption that large claims are rare and lumpy will watch that band fill in faster than the triangle modeled, because frequency-driven severity develops more predictably and reports on a shorter lag than a shock claim.
That predictability cuts both ways. Frequency-driven MSK is easier to reserve, because the emergence pattern is more stable than a shock-claim distribution. It is harder to laser, because a carrier cannot fence off a category that shows up across dozens of members rather than in one named claimant. The result at renewal is pressure on the attachment point itself, and on the aggregating-specific corridor, rather than a clean individual laser.
Where this shows up in your reserves
Open last quarter’s stop-loss reconciliation and pull the count and dollars of claims in the layer just below your specific deductible and in the first band above it. If the $250,000 to $1 million slice is growing faster than your overall claim trend, and the growth is orthopedic and inpatient-surgical rather than pharmacy, you are living the Sun Life pattern. Compare your own four-year development of that band to the report’s 46% frequency rise; a plan tracking at or above that line is under-attached for 2027. This is the same accelerating-baseline problem visible in rising specific claim trends, reached from the frequency side rather than the shock-claim side documented in the gene-therapy aggregate exposure and comorbidity-driven $3M claims.
What this means for your next review
Put the frequency-versus-severity question on the agenda explicitly, and see IBNR for self-funded health plans for how the layer develops.
- Split your large-claim development into a shock band and a frequency band, and reserve them separately.
- Test whether your specific attachment was calibrated for rare catastrophic hits or for a thickening MSK band, and reprice the gap before 2027 quotes land.
- Ask your stop-loss broker whether carriers are pricing the MSK frequency shift into attachment points and aggregating-specific corridors, and model a laser or attachment increase now rather than at renewal.
An independent reserve review brings a second pair of eyes that is free of the TPA’s or fronting carrier’s incentive structure. We’re working on a directory of independent reviewing actuaries. If you’d like to be considered, get in touch.
Sources
- Cancer still tops high-cost health claims but muscle and orthopedic conditions are making surprise surge: Sun Life report (PR Newswire, May 21, 2026)
- What drives multimillion-dollar medical claims? Sun Life report (PR Newswire, May 22, 2026)
- Sun Life releases annual report on highest-cost medical claims (StockTitan)