Stop-Loss Insurance | Practical Law

Stop-Loss Insurance | Practical Law

Stop-Loss Insurance

Stop-Loss Insurance

Practical Law Glossary Item 8-505-1085 (Approx. 2 pages)

Glossary

Stop-Loss Insurance

A type of insurance policy for self-insured health plans that limits the amount employers must pay for claims incurred under their group health plan. Stop-loss insurance generally is designed to ensure that catastrophic claims or an increased number of claims do not upset the financial reserves of a self-insured health plan. For example, stop-loss insurance may cover:
  • Any individual claim that exceeds $500,000.
  • Claims incurred once the employer has paid $5 million in the aggregate during the plan year.
Stop-loss policies paid for out of the employer's general assets and without any employee contributions generally are not considered plan assets.