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The Blueprint

The Role Stop Loss Insurance Plays in Self-Funding

Health plans can be a tricky field for industry professionals to navigate, from understanding what options are available to determining what actually makes sense for your company. Health costs can make or break a company financially, so choosing the right health plan is not only necessary but vital. And for many employers, the right choice is increasingly leaning toward the self-funded field.

Self-funded health plans are an attractive option for several reasons. Not only do employers have more control over the health plan, but instead of paying a set amount as you would if you were fully insured, you also can keep the potential savings. To put it simply, self-funding takes the reward—it also takes the risk.

At RMTS, we deal directly with self-funding and mitigating risk, so we can tell you firsthand—the risk part of that equation can be scary, especially if you consider the possibility of devastating claims. Going in without any safeguard could be catastrophic for your business. Luckily, that’s why RMTS offers a full range of medical stop-loss policy options that act as that safeguard.

Put simply; stop-loss insurance protects employers against the potentially devasting financial impact of high-cost claims. While employers with fully insured health plans pay fixed premiums to the insurance carrier, those with self-funded health plans take on the responsibility of paying for employees’ medical claims directly. This has the potential for tremendous savings, but it also presents a risk if one of the employees happens to have a high-cost claim. Stop-loss insurance will reimburse the employer for claims that exceed a set threshold, combatting that risk.

There are two types of stop-loss coverage:

  • Specific Stop-Loss Insurance
    As the name suggests, specific stop loss is an excess risk coverage that protects an employer against a high claim from any one specific individual. Also known as individual stop-loss, it serves as protection against a single, abnormally severe claim as opposed to an abnormal frequency of all claims. Employers are reimbursed for claims that exceed a set dollar amount on a per-employee basis.1
  • Aggregate Stop-Loss Insurance
    In contrast, aggregate covers more than just a single claim. It provides a ceiling on the dollar amount of total eligible expenses an employer would pay during a contract period. At the end of that period, the carrier reimburses the employer for the cumulative claims if they exceed the set threshold.1

While specific and aggregate stop-loss have their own particular uses, most employers tend to protect their plan with both types of coverage unless they happen to be a particularly large employer. There are some cases where employers may only need one type of stop-loss insurance, but overall, it’s generally wiser to leverage both.

Here’s an example to illustrate stop-loss in action: an employee incurred $150,000 in medical expenses. With a stop-loss deductible set at $100,000, the employer would only take responsibility for that first $100,000, and the stop-loss coverage would kick in for the additional $50,000.

It’s difficult to overstate how important having that financial protection can be—not only does stop-loss reduce risk, but the increased control over health plan costs allows employers to better manage their financial risks and budget effectively.1

At RMTS, we make sure our clients have peace of mind and savings, looking out for you with our expert stop-loss policy options, not only for self-funded plans but level-funded ones as well. Your policy will be with strictly A-rated carriers, guaranteeing a top-tier experience.

Our dependable service guarantees you’ll have peace of mind when it comes to self-funding health plans, knowing that you’re protected from whatever high-cost claims come your way. Don’t let the risks outweigh your rewards—reach out to us today!