Stop loss policies protect individuals on the plan.

Stop loss policies protect individuals on the plan.

• A. True
• B. False
• C. Only for high-cost individuals
• D. Not sure

Answer: (B)

Stop-loss insurance is a risk-protection tool for self-funded plans, designed to shield the plan sponsor from very high medical costs. It doesn’t provide direct protections to individual members; instead, it reimburses the plan for large claims, keeping the employer from bearing the full financial burden. There are two common forms. Specific (individual) stop loss kicks in when a single member’s claims exceed a set deductible for the year, paying the excess up to a limit. Aggregate stop loss covers the total of all claims across the plan if that year’s overall costs surpass an annual threshold. So, while it helps the plan manage costs, it’s the plan (not each individual member) that is protected. That’s why the statement is false. It’s accurate that stop-loss protects the plan sponsor’s financial risk, not individual members directly.

Stop-loss insurance is a risk-protection tool for self-funded plans, designed to shield the plan sponsor from very high medical costs. It doesn’t provide direct protections to individual members; instead, it reimburses the plan for large claims, keeping the employer from bearing the full financial burden.

There are two common forms. Specific (individual) stop loss kicks in when a single member’s claims exceed a set deductible for the year, paying the excess up to a limit. Aggregate stop loss covers the total of all claims across the plan if that year’s overall costs surpass an annual threshold. So, while it helps the plan manage costs, it’s the plan (not each individual member) that is protected.

That’s why the statement is false. It’s accurate that stop-loss protects the plan sponsor’s financial risk, not individual members directly.