Medical Stop Loss Insurance: a Small Item with BIG Ramifications
- By Mark Bajus, CEBS
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- 30 Apr, 2017
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Stop loss insurance caps the annual exposure of the plan to large drug and medical expenses. For example, the $40,000 annual Remicade claim above may only result in $10,000 being added to claims experience; the remaining $30,000 would be fully paid as per the plan design, but would be paid by the Stop Loss policy. The point where the Stop Loss policy takes over paying the claim is called the attachment point.
Stop Loss plan designs vary widely. Depending on a number of factors including which insurer or third Party Administrator your plan is with, the attachment point could be as low as $3,000 annual, or in excess of $15,000 annual. Some plan providers offer a number of choices in attachment point levels; others have little flexibility.
With lower attachment points, come generally higher Stop Loss premium costs, so there is a definite cost/benefit discussion that has to take place with plan sponsors when designing a benefit plan. It’s an important discussion to have: the wrong choice can cost a plan tens of thousands of dollars in unforeseen claims costs.
Mark Bajus - CEBS, CLU, CFP - is the Director, Group Benefits for BF Partners. Learn more about Mark.
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