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Stop loss insurance is designed to reduce the financial
risk for those employers who choose to self-fund their employee medical
plans. Self funding is a safe, viable alternative to conventional medical
plans. Employers set aside money to use to reimburse the medical expenses
of its employees. The amount of risk is based upon the employer's
comfort level. Anything beyond that risk is protected by a stop loss
plan.
Stop loss protects the self-funded employer from losing
money due to devastating or catastrophic claims. "Specific
(individual) stop loss" protects the employer from any single large
claim. "Aggregate stop loss" protects the employer from an
unusual accumulation of smaller claims.
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