In our previous post, we discussed the benefits of self-funding for employers. While self-funding offers significant financial advantages and greater control over benefit plans, it also introduces the risk of unpredictable and potentially catastrophic claims. This is where stop-loss insurance plays a critical role.

What is Stop-Loss Insurance?

Stop-loss insurance acts as a safety net for employers, protecting them from excessive claims costs. It provides coverage when claims exceed a predetermined threshold, ensuring that the employer is not liable for costs beyond their financial capacity.

There are two main types of stop-loss coverage:

• Specific Stop-Loss: This covers individual high-cost claims, such as those resulting from major medical events or chronic illnesses.
• Aggregate Stop-Loss: This protects against high total claims for the entire employee group, activating when overall claims exceed a certain percentage of expected costs.

Stop-loss insurance is essential for managing the financial risks associated with self-funding. However, to maximize its benefits, employers should consider partnering with a Managing General Underwriter (MGU), which we’ll explore in our next post.

At USBenefits, we’re always available to assist our TPAs, consultants and broker partners every step of their journey in delivering cost savings and risk mitigation. Your goal is our goal – to provide the best possible outcome for the employer.

Contact us at (877) 877-4USB (4872) or info@usbstoploss.com.