Self-Funded | Stop-Loss

Stop Loss is a tool used in self-funded insurance plans to reduce the overall liability of claims. In a self-funded plan, the employer takes on the financial risk of providing health care benefits to employees instead of the insurance company. The employer is then responsible for all employee and plan member claim costs by all employee and plan members. The employer's plan is usually executed by a Third Party Administrator (TPA) who manages medical claims, establishes a provider network and more. The employer can utilize numerous tools, including Stop Loss insurance, to help manage total losses by improving their ability to lower plan premiums and costs.

The ability to provide competitive Stop Loss insurance is very important in determining your client's ability to self-fund. Since your client is taking on the financial risk of covering all medical claims, their main concerns may include; individuals with catastrophic claims and their employee's overall use of the health plan. 

Stop Loss insurance is built to cover catastrophic claims that exceed your client's per-determined risk tolerance. Stop Loss insurance is available in Individual (Specific), which covers catastrophic losses on each individual insured under the health plan, and Group (Aggregate), which provides additional protection for self-funded health plans designed to limit the plan's maximum financial risk.

Not every employer is right for self-funded insurance. A common misunderstanding is that self-funding is only for large employers. Self-funded insurance plans can be set up by smaller employers as well. There are no rules to follow to determine if your client is right for a self-funded plan. The best way to determine if your client can benefit from self-funding is to analyze their existing health plan and recent claims.