Protecting You with Stop-Loss Insurance
For small and mid-sized employers, self-funding is really “partial” self-funding because stop-loss insurance is purchased to cover catastrophic claims.
ACS can assist you in determining what stop-loss coverage you should purchase. We can even help you evaluate other risk-transfer options, like transplant insurance to cover catastrophic claims rather than covering them under the self-funded plan.
There are two main types of stop-loss insurance. Specific stop-loss insurance protects the plan against an individual catastrophic claim. Aggregate stop-loss insurance covers claims that exceed a given amount for the entire covered group.
A Brief Illustration of How Stop-Loss Insurance Works:
- If your limit for specific stop-loss is $50,000 (per member per year) and one member incurs claims of $75,000, the plan's liability would be limited to $50,000 and the remaining $25,000 would be reimbursed by the stop-loss carrier.
- When an entire covered group has expected claims of $500,000 per plan year, reimbursement by the stop-loss carrier would normally take place if actual claims exceed 125% of the expected claims, or $625,000 overall.
- The $625,000 amount is refered to as your attachment point, or the amount above which the carrier has liability.
- The cost of a self-funded plan is the total of fixed costs (e.g., administrative expenses, stop-loss premiums, etc.) and the claims paid by the plan less stop-loss reimbursements.
At ACS, industry experience, business relationships, and expertise enable us to secure the best stop-loss protection for our clients. We work with only high-quality stop-loss markets that offer a variety of contract options. This helps our clients select the most appropriate coverage at competitive rates.