Stop Loss Underwriting
Most companies or employers today operate the so called self-funded health care insurance for their employees. This is where an employer provides health or disability benefits to their employees using their own funds. This is actually a perfect strategy for a company to prevent themselves from paying those monthly premiums for their employees’ health care benefits. This doesn’t mean that they will remove the health care benefits for their employee, it’s just that, unlike those fully insured plans, the employer will only shoulder only those approved insurance claims from their employees.
The coverage, the terms of eligibility and so as the policies are almost similar to those being offered by fully insured plans. It’s true that the money that will be used for this insurance comes from the employer’s own funds but this doesn’t mean that they will shoulder or pay for the whole medical expenses whenever an employee filed an insurance claim. Of course, just like other insurance plans, the employer should also limit their liability by purchasing the so called “Stop loss” insurance from an insurance company or carrier. Stop Loss is actually designed to help protect self-insured employers from absorbing most of the costs associated with such severe events. Most employers used to hire a Third Party Administrator or insurance underwriters if they will operate a self-funded health plan. Their Stop Loss Underwriting team will evaluate the risk and exposures of potential clients. They are the one who decide how much coverage the client should receive and how much they should pay for it. That’s why an Employer should seek for a highly qualified, honest and competent TPA for their company. Employees should look forward to it too to know if the TPA will give them nothing but honest and fair service.
