A type of specialized self-insurance that allows employers to pay employees’ healthcare costs up to a certain, predetermined amount—and then rely on the insurer to make up the difference. Though some employers see this as a tactic for saving money, others end up spending much more than they would have using a group health insurance plan instead.
Depending on the policy’s limits and overall employee health, stop loss coverage may be risky and very expensive. It can protect the finances of companies containing younger workers with fewer medical bills, but can be a major expense if even one worker faces a major health issue, for which the employer must then compensate.
To see if stop loss insurance is right for your company, estimate the claims you’re likely to pay and compare them against a stop loss coverage premium. In the end, you may find yourself well ahead by purchasing an employee group health insurance plan.