Aggregate stop-loss insurance,

Definition of Aggregate stop-loss insurance:

1. Aggregate stop-loss insurance is held for self-funded insurance plans for which an employer assumes the financial risk of providing healthcare benefits to its employees. In practical terms, self-funded employers pay for each claim as it is presented instead of paying a fixed premium to an insurance carrier for a fully insured plan. Stop-loss insurance is similar to purchasing high-deductible insurance. The employer remains responsible for claim expenses under the deductible amount.

2. Aggregate stop-loss insurance is a policy designed to limit claim coverage (losses) to a specific amount. This coverage ensures that a catastrophic claim (specific stop-loss) or numerous claims (aggregate stop-loss) do not drain the financial reserves of a self-funded plan. Aggregate stop-loss protects the employer against claims that are higher than expected. If total claims exceed the aggregate limit, the stop-loss insurer covers the claims or reimburses the employer.

3. A type of commercial insurance policy whereby additional coverage is provided to cover costs that exceed traditional coverage in a self-funded plan. For example, if the total amount of benefit claims equal 120% of the face amount of one policy, this insurance would cover the additional 20% of the total costs.

How to use Aggregate stop-loss insurance in a sentence?

1. Stop-loss insurance is similar to high-deductible insurance, and the employer remains responsible for claims below the deductible amount.
2. The deductible or attachment for aggregate stop-loss insurance is calculated based on several factors including an estimated value of claims per month, the number of enrolled employees, and a stop-loss attachment multiplier which is usually around 125% of anticipated claims.
3. Aggregate stop-loss insurance is designed to protect an employer who self-funds their employee health plan from higher-than-anticipated payouts for claims.