Specific Stop-Loss insurance provides self-insured employers with financial protection from large claims that occur for any one covered individual. If the employee’s or dependent’s covered medical claims exceed the specific deductible level, the stop-loss carrier will reimburse the employer for the covered claims that exceed the limit. The stop-loss policy reimburses medical expenses in excess of the deductible that are covered by the employer’s self-funded medical plan.
Aggregate Stop-Loss insurance provides financial protection when the total of all claims under the Specific deductible is higher than expected. At the end of the policy period, The carrier reimburses the employer for all eligible claims costs above the pre-determined Aggregate deductible level. Typically, employers choose a policy that covers medical and prescription drug expenses. In addition, if the employer wants to add more coverage, some stop-loss carriers can also provide reimbursement for dental care, short-term disability, and vision.
Stop-Loss Group Captive
A stop-loss captive is an insurance entity formed and managed by like-minded employers looking to increase control of their employee health benefit programs to reduce overall cost. With a group stop-loss captive, small employers gain negotiating power of a larger company by sharing a layer of risk resulting in more predictable claims experience. Additionally, the overall cost of the captive is stabilizing which facilitates providing healthcare insurance to employees on a long-term basis. As with traditional stop-loss, the shared layer of risk in a stop-loss captive is capped by an excess limit and an aggregate reinsurance. Generally small employers with 50–250 employees are potentially a good fit for a captive solution. Choosing a captive solution can also be an effective way for a fully insured employer to transition to a stop-loss funding arrangement.