Healthcare businesses face many risks as they deliver care to patients. Some of these risks include protecting staff members. Self-funded healthcare coverage is often an employee benefit extended to people working in healthcare facilities, including hospitals, skilled care centers, and nursing homes. Unfortunately, these insurance plans do not always adequately cover certain potential claims. To prevent against higher-than-expected claims, more and more businesses are turning to Caitlin Morgan Insurance Services and many other stop-loss insurance providers as a solution. Insurance agents must become familiar with this unique insurance tool, helping businesses to protect their financial interests and their staff with enhanced coverage.
What is Stop Loss Insurance?
Developed in response to rising group insurance costs, stop loss insurance plans serve as a cost-effective alternative to traditional group insurance. Stop loss insurance is a policy tailored to limit claim coverages to a specific and pre-set amount, and is particularly beneficial for businesses that self-fund their own group health insurance plans. Stop loss insurance is designed to protect against both catastrophic claims, known as specific stop-loss, as well as numerous claims, often referred to as aggregate stop-loss. Policies may be obtained for specific or aggregate stop-loss, but many employers benefit from purchasing combination coverage; employee health claims can be unpredictable, and combination coverage provides superior flexibility and protection.
In essence, the way this stop loss insurance works is that if claims exceed the limits set by the policy, the insurance carrier reimburses the employer for those excesses. The leading benefit of the stop loss insurance solution is that employers do not have to shoulder all of the liability for losses associated with excessively high employee medical claims. It is important for insurance agents to understand that stop loss insurance is not employee medical insurance, but rather serves as a valuable risk management tool for business owners.
How Does Stop Loss Insurance Work?
With the passage of the Affordable Care Act (ACA) and subsequent costs associated with providing health insurance to employees, many companies seek to reduce expenses. One of the primary means of providing insurance while reducing the costs is by self-funding group health plans, which satisfy the regulations of the ACA while protecting against the taxes, fees, and restrictions under the Act.
Imagine if an employee were to be diagnosed with a severe disease, or may require an organ transplant or emergency life-saving surgery. These medical needs may cost hundreds of thousands of dollars, and unforeseen healthcare claims can quickly exhaust an employer’s self-funded insurance limits and cash reserves, potentially leading to dire financial circumstances for the company. Under a stop-loss plan, out-of-pocket claim expenses are covered up to a pre-determined cap. Any claim expenses in excess of the cap are reimbursed by the insurer. Most stop-loss plans have their own coverage limits as well. Caitlin Morgan and specialty insurance providers can help businesses protect their financial interests and their employees with this coverage.
About Caitlin Morgan
Caitlin Morgan specializes in insuring assisted living facilities and nursing homes and can assist you in providing insurance and risk management services for this niche market. Give us a call to learn more about our programs at 317.575.4440.