What is Stop Loss Insurance?

Today, the employer has the option of ‘self-insurance’. The employer takes on the responsibility of not only insuring the medical expenses of the employees, but also those of their families. The other option he has is to take care of the medical expenses as they arise out of business cash flow. The latter however, can be a risky affair. Although it does seem a great cost-effective alternative to the traditional insurance otherwise provided, it tends to stop shop in the case of a number of employees getting seriously ill within a time frame. In this case, the incurred medical bills could actually eat into and eliminate the medical fund payments planned or kept aside by the employer.

The expense may turn out more than the employer's ability to pay. The employer is also exposed to the risk of lawsuits, in event of the medical bills remaining unpaid and if the amount is in excess of the itinerated and planned regular amount, then he or she might even be looking at a possible bankruptcy! The entire concept of Stop Loss Insurance is designed to help guard the employer in such a situation. In the case of such a business-owner-self-insurance, the employer is expected to pay a certain calculated, pre-determined amount to the insurance company and thereafter, the Stop Loss Insurance Company pays the employees' medical bills. There are special insurance policies that are designed to protect the employer from tall claims made by a particular employee or any family member.

Once the employer deposits the pre-determined amount with the Stop Loss Insurance Company, the company takes complete care of subsequent claims against the policy's coverage limit. Some of the policies also protect the employer in event of claims of really unexpectedly large amounts. However, in all the schemes and plans the pre-determined coverage limit, set by the employer and the company, applies. It is true that Stop Loss Insurance offers great financial protection while dealing with this support insurance the employer is bound to offer employees, but it is also necessary to thoroughly weigh the pros and cons and the cost against potential benefits.

The kind of Stop Loss Insurance required by a business is largely determined of the basis of the risk exposure. If it is low, where most of the employees are a young, healthy lot, the employer could opt for the ‘self-insurance-without-stop-loss insurance’ protection. On the other hand, if the estimated claims the employer is likely to pay and the premium calculated by the insurance company executives is on the higher side, then it is lucrative to invest in the group-insurance-plan-with-stop-loss-insurance that covers the employees and their families. Depending on the employer’s calculations and predicted insurance requirement, he or she needs to identify and invest in a good insurance company that makes the stop-loss insurance available, with the specialized products.

The Stop Loss Insurance coverage is basically available in two types. The Specific Stop Loss coverage pays the lifetime limit claims, per employee, within the understanding established for the self insurance medical plan. In the case of the Aggregate Stop Loss coverage, the claims are taken care of when the employer's self insurance total group health claim touches a certain ceiling cut off that is pre-determined. This cut off is calculated on the basis of the self insurer's annual estimated group health claim cost. The estimates and calculations are offered by professionals like leading consultants, brokers and TPAs.

The Stop Loss Insurance supports employer and employee needs via unlimited access to the industry's top-rated services and competitive premium rates. Today, thousands of employers all over the world, both public and private, are reaping the benefits of partnerships with such insurance companies and their trusted advisors. The companies handle consulting requirements and municipal risk pools to reach out to public entities. This type of insurance reaches out to business segments like manufacturing and service and retail . They are designed to step in and salvage a business situation arising from complex and high-cost claims, serious illness, essential organ transplants and even the treatment of genetic disorders.