Short answer: A pooling point is a per-person dollar level set by the carrier. The part of any one person’s claims above it is taken out of the group’s experience and replaced with a pooling charge shared across the carrier’s business, so a single catastrophic claim does not drive the renewal by itself; claims below the pooling point still count fully.
Pooling is a way of treating catastrophic claims differently from routine ones. Actuarial Standard of Practice No. 25 notes that parts of a group’s experience that are not typical of the whole can be treated separately to improve the prediction. Pooling puts the excess layer back on the carrier’s larger pool, and every group pays a pooling charge for that protection whether or not it has a large claim.
Questions to ask the carrier:
- What is the pooling point for this group, and what pooling charge is in the renewal?
- Was the pooling applied to paid or incurred claims, and to medical and pharmacy together?
- Is a large claim marked as ongoing or resolved? Underwriters project future cost, so a claim for someone who has finished treatment or left the plan may deserve different treatment than an ongoing condition. Give that information through the proper channels without disclosing identities.
Pooling points and charges vary by carrier and group size. Compare them when weighing competing quotes.