What is Stop Loss Insurance?
Stop loss insurance is a type of reinsurance that protects self-funded health plans from the financial impact of catastrophic claims, much like umbrella coverage for a home or business owner. When a health claim cost is incurred beyond a specified amount, the stop loss coverage kicks in to reimburse the plan or plan sponsor. Stop loss insurance can be purchased by the health plan to protect assets or by an employer to protect itself as the primary source of the plan’s funding.
Specific vs Aggregate? Coverage Levels in Stop Loss Insurance
Stop loss insurance typically has two coverage levels that work together, Specific and Aggregate. The Specific will reimburse the Plan for claims that exceed a member’s Specific Deductible. Aggregate coverage reimburses when the total of all members’ claims exceed the Aggregate Deductible. Unlike many Stop Loss providers, TPAC does not force clients to include lasers. We are able to create solutions both with and without them, allowing us to create the best plan for the client’s needs.
Level Funding in Stop Loss
A major concern about self-funding health insurance for employers is the volatility of monthly payments. Level funding solutions address this worry by providing an even monthly amount that is paid by the employer, with any remaining claims costs paid by the stop loss policy. TPAC offers both an aggregate-only level funded product with Spaggregate® and SmartShare®, a level funded stop loss product with both specific and aggregate attachment points.
What Are Some Benefits of Self-Funding?
As health care costs continue to rise, more employers are looking for cost containment solutions that work. In the right situation, employers who self-fund their health insurance can reap significant benefits. Self-funded plans typically have lower rate increases compared to traditional plans. Plus, savings are retained by the plan rather than disappearing into insurance company’s profits. Plans are also custom designed for specific workforces, giving meaningful benefits to employees directly related to what they actually need coverage for. There are many more benefits to self-funding, and we encourage you to contact us to learn more.
Reference-Based Pricing: Keeping Costs Down
Controlling health care costs effectively is an important component of self-funding success. Reference-based pricing is a health care cost containment model that limits what a health plan will pay for certain high-cost services.
Frequently Asked Questions
How do I know which TPAC products are right for me?
It’s difficult to know exactly which stop loss product will be a fit for your unique needs. We have experts who can help walk you through our catalog and recommend the best option. Please contact us!
How do I know when self-funding is right for my business?
It’s difficult to give a one-size-fits-all answer for when it might be right for your business to begin self-funding its health benefits. When thinking about self-funding, you have to consider your company’s financial situation, cash flow, risk tolerance, and coverage needs, plus how to handle administration and compliance. TPAC can help you navigate this important business decision. Contact Us!
What is Spaggregate®?
The first level-funded stop loss policy
How do I get a stop loss quote from TPAC?
For large groups, we use claims experience and demographics to determine the right rates for your group.
For groups with less than 100 employees, we can quote without individual questionnaires or claims experience! Contact us to find out how.
My question isn’t answered here. What should I do?
We’re happy to answer any other questions you might have. Please contact us!
For more information about self-funded health benefits or stop loss insurance, please see the following links: