If you have read our blog posts, by now you know that stop-loss insurance is a layer of protection that prevents absorbing the costs of abnormally high or catastrophic claims. Fully insured plans typically come with fees that can be completely avoided by having self-insurance. There are risks that come with self-insuring, however. That’s where stop-loss comes in – to help avoid those risks.
How Stop-Loss Saves You Money
Before making the decision to self-insure, there are several things to consider. First, the size of your insured members is important, as well as the demographics of them, and the amount of cash flow your organization has. There are two different types of stop-loss coverage: specific and aggregate. Both have unique advantages for employers, and most employers use a combination of the two.
Specific stop-loss is also called individual stop-loss coverage, and it puts a specific limit on a claim that a specific member can make. This is a good option for businesses that are concerned with the high costs of individual claimants. Aggregate stop-loss is a cap on the health coverage of an entire company. Once the total overall claims paid goes over the cap limit, the employer is reimbursed for that amount that has been exceeded.
Another important aspect of stop-loss coverage is a stop-loss captive. These are when employers who have at least 50 employees come together to help minimize the associated healthcare risks of themselves as a group. Each employer still has its own benefits for its stop-loss policies that come along with them.
Important Stop-Loss Terms
When making the decision to use stop-loss insurance, be sure to first learn some important terms. The first term is a paid contract. This just means that the contract covers all claims which are made in the specific year of each policy. The other term is an incurred contract. The incurred contract period is typically 3 months or up to one year. Be sure to understand the length of your contract, because this is the time period that the claims of your members will be covered.
Why Stop-Loss Is a Good Investment
A stop-loss policy is a smart investment for employers because it helps to mitigate risks and protect themselves against catastrophic claims. When employers invest in stop-loss plans, they safeguard themselves from having to shell out high costs of unexpected claims.
Trust the Stop-Loss Experts
By incorporating stop-loss into their insurance policy, self-funded employers are limiting their risk and safeguarding themselves against high claims. If you are in the market for an important stop-loss policy for your organization, you have come to the right place. At Prodigy, we take pride in explaining every small detail for our customers so they know exactly what they are getting into before they pay a dime or sign anything. We are here to answer any and all questions you may have. Don’t hesitate to give us a call today to get all of your concerns addressed. We look forward to working with you.