If the idea of saving money by offering self-funded health benefits to your employees appeals to you but the RISK of paying out large, unexpected or unplanned claims concerns you . . . you will be happy to know this.
Stop-Loss insurance is a policy that works in conjunction with self-funded health plans. It is an insurance product that provides protection to employers from the financial risk of catastrophic or unpredictable high cost and/or high volume of claims filed under the plan. Stop-loss coverage protects against claims that could compromise the company’s financial health at any given time.
Employers have two categories of coverage to consider.
Specific: protection for high claims on any one individual member.
Aggregate: protection that establishes a ceiling on the amount of total expenses during a contract period.
Stop Loss insurance is typically purchased by the employer through a TPA or directly from a carrier underwriter. Working with these experts, an employer can determine their threshold of claim payment risk and thereby set the desired level of protection needed.
Q: How does Stop-Loss work?
A: A TPA can source a Stop-Loss insurance carrier who will assist an employer in setting risk limits and terms of a policy. TPA’s coordinate the policy’s premium payments to the carrier as well as provide administrative services in managing Stop-Loss claims as they occur.
Q: How beneficial are claim reports provided by a TPA?
A: Federal regulations require TPA’s to track and provide reports to clients. These
company-specific reports are updated regularly and contain actionable information that can identify cost savings, guide plan customization and wellness strategy of an employer.
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