In the broadest sense, medical stop-loss insurance, which is also known as excess insurance, is coverage that provides protection in the event of a catastrophic or unpredictable loss. This form of insurance is sought after by employers who have made the decision to use their own funds to pay for their employees’ benefit plans.
Essentially, this form of coverage is purchased by an employer prior to the catastrophic loss to prevent the employer from assuming 100% liability if their employees’ benefit payments have been interrupted. In this article, you will learn more about medical stop-loss insurance, and why it’s a practical solution for employers who self-fund their employee benefit plans.
What Constitutes as a “Catastrophic Event”?
In business, unfortunate events are bound to happen. Usually, when a business begins operators, the employer may elect to pay for his or her employees’ benefits. If the business happens to be a sole proprietorship, liability can gradually increase. For example, if a business encounters a lawsuit, the assets of the owner will be targeted.
As a result, the owner may not be able to make regular payments on their employees’ behalf for a temporary time period. This example constitutes a catastrophic event. In addition, any sudden loss of income or unpredictable business change can fairly constitute a catastrophic event as well.
Who is Held Liable?
In the event that an employer purchases medical stop-loss insurance, he or she will be unable to accept liability for the inability to make benefit plan payments. In accordance, the insurance provider will accept this liability for certain losses that exceed specific limits, which are known as deductibles. The employer will establish these deductibles with the insurance provider, depending on their purchased plan and/or circumstances.
To learn more about our medical stop-loss insurance, please contact us today to receive optimal information from our dedicated team members.