Stop-Loss is an insurance product which provides protection against catastrophic or unpredictable losses. It is purchased by employers who self-insure their employee benefit plans, but do not want to assume 100% of the liability for paid claims. Under a Stop-Loss Policy, an insurance company becomes liable for losses which exceed predetermined limits called deductibles or attachment points.
Self-insurance is better because it puts an employer in control of their own money. Self-insurance is good for the company who is tired of providing the funds for insurance companies to erect massive buildings and pay obscene bonuses to Insurance company/HMO executives. With traditional insured programs, premium is fixed and when given to an insurance carrier/HMO the money is irretrievable, unless an employee makes a claim.
Self-insurance is a safe, extremely viable alternative to conventional insurance plans. The amount of yearly risk is based upon what the business can handle. Anything beyond that predetermined amount is covered by stop-loss insurance.
While the company may have to assume some extra administrative duties, most of the day-to-day plan functions will be handled by the third party administrator.
A significant difference between Stop-Loss and conventional employee benefit insurance products is that stop-loss insures only the employer.
The employer’s plan document defines the benefits offered to the employees and is critical in determining liability under Stop-Loss coverage. Because the employer has great latitude in designing the plan, there may be elements in the document that are not included under the Stop Loss coverage. The covered portions of the plan document must be approved by the underwriter in order to affect the Stop-Loss coverage. Changes in the plan document, after its initial acceptance, must be approved prior to their inclusion in the Stop-Loss coverage.
The PGU plan includes Specific Stop-Loss Coverage designed to protect the employer against large individual claims. If the employer purchases a $20,000 Specific Stop-Loss policy, the employer’s fund pays the first $20,000 and Specific policy pays the rest.
The PGU plan protects the employer’s cash flow against the hardship of several large claims in two ways.
1. Cash flow is protected on a monthly basis by the Monthly Aggregate Stop-Loss Coverage. The employer does not pay more than the accumulated monthly maximum.
2. Cash flow is protected on an annual basis by the Annual Aggregate Stop-Loss coverage in that the employer pays only up to the annual maximum.
No. With PGU the employer has the security of knowing the maximum out-of-pocket liability.
The PGU program is designed to be less complicated, from the employer’s perspective, than many fully insured plans.
The PGU plan is specifically designed to allow medium-sized employers (25 to 500 employees) to maximize their opportunity to save money with the security of an insured plan. The PGU has numerous clients of all sizes that have enjoyed the advantages of this type of program for many years.
