Spec-only stop loss coverage is typically chosen by which type of clients?

Spec-only stop loss coverage is typically chosen by which type of clients?

• A. It is typically chosen by very small employers
• B. It is used to protect against large individual claims for very large groups
• C. It replaces the need for any other stop loss
• D. It reduces the number of claims

Answer: (B)

Spec-only stop loss coverage protects a self-funded or very large group plan from extremely costly individual claims by reimbursing amounts that exceed a set per-member threshold. This is especially valuable to very large groups because the financial hit from one high-cost claim can be substantial, so having a per-person cap helps stabilize costs. It’s not a replacement for other stop-loss protection and it doesn’t reduce how many claims occur; there’s still a separate need for aggregate stop loss to guard overall annual claims. Very small employers typically wouldn’t rely on this because the per-member risk is lower and the cost-benefit balance isn’t favorable.

Spec-only stop loss coverage protects a self-funded or very large group plan from extremely costly individual claims by reimbursing amounts that exceed a set per-member threshold. This is especially valuable to very large groups because the financial hit from one high-cost claim can be substantial, so having a per-person cap helps stabilize costs. It’s not a replacement for other stop-loss protection and it doesn’t reduce how many claims occur; there’s still a separate need for aggregate stop loss to guard overall annual claims. Very small employers typically wouldn’t rely on this because the per-member risk is lower and the cost-benefit balance isn’t favorable.