Medical stop-loss insurance, also known as excess coverage insurance, intends to provide protection against catastrophic or unpredictable losses for self-funded employers.
If a self-funded plan has a more significant claim than its deductible, the stop-loss policy reimburses the excess amount of the loss coverage. Deductibles are limits set in the policy, and in case the loss exceeds this limit, the insurance company is liable to cover the excess amount.
Insurance carriers often add extras to their services or attempt to control exposure through various exclusions and limitations. These enhancements can add further value to a healthcare product; however, they can be very complicated and come with challenges and costs to the medical plan that is not always necessary.
Different types of Stop-Loss Insurance
Medical stop-loss insurance is essential for self-funded employers to avoid large losses. But what particularly is a self-funded insurance or medical stop loss?
Specific Stop-Loss: Also known as individual stop loss, this form of excess risk coverage offers protection against a high claim of any individual. This type protects against an exceptional and large single claim and does not include the frequency of claims in total.
Aggregate Stop-Loss: This type of medical stop-loss policy focuses on the total coverage paid by an employer. This policy includes a specific amount of eligible expenses in total during a contract period. The amount of all single claims are aggregated during this period and must be reimbursed to the employer by the carrier after the end of the contract period.
Employers usually purchase both types of stop-loss products to protect themselves from huge single claims as well as frequent claims that aggregate to a high excess over the deductible.
Benefits of Medical Stop-Loss
Self-fund insurance, or easier to say, self-insuring comes with its risk for any employer. Medical stop-loss policy aims to limit this risk by providing security and financial coverage.
Compared to other liability coverage, this policy is rather straightforward and can be kept relatively small with the help of an underwriter or MGU (manager general underwriter).
The setting of a deductible is pretty clear and stated in the policy. Once this deductible is exceeded, it is easy to proof and, hence, allows a straightforward claim process. Even for the claim process, employers can assign professional stop loss underwriters for a quick and clear excess coverage to avoid financial inconvenience.
Medical stop-loss gives you the ability to control your expenses regarding employee health benefits and gives you more financial stability. Policies can vary depending on employer needs and could include not only medical but also prescription drugs, dental and vision.
Since stop-loss policies and employer needs can vary, it is recommended to assign professional medical stop-loss underwriters to help you with choosing the right plan for your specific financial needs. Contact us and our team of professional brokers and TPAs to learn more about our stop loss solutions.