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| As an employer, you should safeguard against a catastrophic
claim by accessing a third party administrator and by purchasing stop-loss
insurance coverage. Stop-loss coverage enables you to gain the advantages
of self-funding while providing protection in the years of high claims
expense. This protection is available in two forms: |
SPECIFIC COVERAGE
Specific stop-loss limits your liability for claim expenses per each
covered individual at a predetermined amount. The specific limit is
determined prior to the start of the contract year and is based on
the size of your employer group and risk retention ability. When a
claim reaches the specific limit, you continue to pay the claim; however,
the stop-loss carrier will begin to reimburse you for the amounts
above the specific limit.
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AGGREGATE COVERAGE
Aggregate stop-loss limits your overall liability for the entire group.
Aggregate factors are developed which determine the aggregate attachment
point. The attachment point is set at 120 percent—125 percent
above the estimated paid claims. You are expected to fund the claims
up to the attachment point. When the claims reach the aggregate attachment
point, as with the specific coverage, you continue to pay the claim;
however, the stop-loss carrier will reimburse you. |
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