Stop Loss Insurance

Definition of "Stop loss insurance"

Coverage purchased by employers in order to limit their exposure under self insurance medical plans. This coverage is available in two types:

Specific stop loss Coverage is initiated when a claim reaches the threshold selected by the employer. After the threshold is reached, the stop-loss policy would pay claims up to the lifetime limit per employee for the self insurance medical plan.
Aggregate stop loss Coverage is initiated when the employer's self insurance total group health claims reach a stipulated threshold selected by the employer. Typically, this threshold is 125% of the self insurer's annual estimated group health claims cost.