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Stop Loss Insurance 101: All You Need To Know About Stop Loss Insurance Coverage

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Stop loss insurance is a very important aspect of a benefit plan, it keeps costs sustainable and helps employers with high health expenses. Here are the things you need to know about stop loss insurance coverage and its impact on our benefit plan sustainability! 

(Photo: insurancebusinessmag)

Understanding What Stop Loss Insurance Is

In simple terms, stop loss insurance helps and protects self-insured employers from an unexpected high medical cost. According to Sana Benefits, If a company’s employees have high medical costs that surpass a pre-determined threshold, the insurance company agrees to reimburse the bills, therefore “stopping the loss.”

Stop loss insurance gives additional protection to small companies looking to reduce their financial risk without jeopardizing their employees’ healthcare.

It is important to understand that stop loss insurance is a financial safety rather than health insurance. That means that instead of paying the provider directly, loss insurance firms reimburse businesses for their expenses.

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Choosing The Right Stop Loss Insurance Coverage

Dixon Pilot – Another important thing to know about stop-loss insurance is knowing how to select the best plan. The two basic types of stop loss insurance coverage are specific stop-loss and aggregate stop-loss. Specific stop loss insurance coverage protects against single, high-cost claims that exceed a certain monetary level per individual per insurance period.

On the other hand, aggregate stop-loss protects employers against cumulative claim totals for the entire group surpassing a predetermined sum. This provides coverage for medium to high-cost claims.

Though self-funding is appealing to many organizations, the financial risks can limit its potential benefits. Implementing a stop-loss insurance coverage alleviates concerns about excessive claim payments, allowing businesses to concentrate on other elements of their operations.

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