How Stop Loss Insurance Protects Employees?

New innovations in health care industry are creating various new opportunities not

only for treatments, but also for specific insurance protection plans. Stop loss insurance is a great and affordable alternative as compared to the traditional insurance options.

Nowadays companies have the option of 'self-insurance.' Companies take on the liabilities to insure the medical expenses of their employees as well as their families. There is another option available to insure the medical expense as it occurs through business cash flow.

When a company decides to get self-insurance plan, they are likely to pay a specific intended amount to the insurance company. Subsequently, the insurance company that the employer has opted to provide the stop loss insurance agrees to pay the employees medical bills.

There are several special insurance policies designed to protect the company to pay all the claims that are made by employees or their family members. As soon as the company agrees to pay the amount to the insurance company, the insurance company is liable to take care of the subsequent claims against the policy's coverage limit.

Some policies also protect the company when an employee claims an unanticipated huge amount. Although there is a predetermined coverage limit on the policies that apply, the limit and the policies are set by the employer and the insurance company. Stop loss insurance offers great financial security.

What kind of stop loss insurance a company should opt depends mainly on the degree of risk. If the degree of risk is low and most of the employees are healthy and young, company can opt for the options like 'self-insurance-without-stop-loss insurance' security plan. If the anticipated claims that the company and the insurance firm have calculated to pay the premium to the employees is high, then it is beneficial for the company to opt for group-insurance-plan-with-stop-loss-insurance that covers the employees as well as their families.

Basically it depends on the companys estimated and expected insurance related requirements. They need to recognize and spend in an insurance firm that makes the stop-loss insurance accessible along with the specialized products.

There are two types of stop loss insurance available that a company can opt for:

Specific Stop Loss

Specific stop loss provides tragic protection to the self-paid plan. This type of stop loss occurs when the claims reach to the guidelines selected by the company or the employer. Stop loss policy pays the claims to the lifetime limit on per-employee basis for the self-insurance plan.

Aggregate Stop Loss

Aggregate stop loss is an insurance policy that offers coverage on all expenses, when another insurance policy is above the projected cost. An aggregate stop loss insurance policy decreases the company's risk to provide employee benefits.

by: Jennifer Boerio

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