Health Insurance Articles
Stop Loss And Its Role In Health Insurance Claims
2010-07-24
Stop loss is a term that has come to be associated primarily with a particular form of health insurance coverage, namely self insurance on the part of an employer.
Self insurance is an alternative for providing health insurance coverage for employees when an employer chooses not to purchase a group plan. Instead of paying premiums to an insurance company, the employer opts to pay directly for the medical expenses of its employees. Self insurance can be found among employers of all sizes, in both the public and private sectors. Many school districts, corporations and even some small businesses provide health insurance coverage to their employees through a self insurance plan.
The problem that can arise from self insurance is that if an employee were to be injured or fall ill with a serious medical condition, it could turn into a catastrophic expense for the employer. The expense might be more than the company is even able to pay, leaving the company vulnerable to lawsuits for failing to live up to its guaranteed employee benefits. This is where stop loss insurance comes in.
Stop loss insurance is an insurance policy that the employer can take out that will cover the employer for any catastrophic expense beyond the deductible. The obvious danger, however, is that the catastrophic situation mentioned above may never happen, and thus the company ends up paying for insurance that it never uses. Fortunately, there are two types of stop loss insurance-aggregate and specific. Aggregate stop loss insurance protects companies if their total insurance bill goes over a predetermined number, while specific stop loss insurance guards companies if the claims for just one employee go over a specified amount. In both cases, the higher the deductible-the amount the company is willing to pay out itself in the event of a claim-the less costly the stop loss insurance will be. These two types of stop loss insurance are paid to companies in different ways. With aggregate stop loss insurance, claims are paid out either monthly or for the year ahead in advance. Specific stop loss insurance claims are generally paid out once a month for each employee covered by the health plan.
Stop loss insurance offers health insurance coverage at an incredibly competitive rate thanks to its access to many of the industry's best services. Moreover, stop loss insurance covers many thousands of employers, in the private and public sectors, enabling businesses to offer health insurance to their employees while also protecting themselves against excessive claims. For businesses unwilling or unable to face the costs of group insurance, stop loss insurance is a crucial insurance safeguard.
