Can Self-Funded Plans be protected against large claims?
There are insurance policies called Stop-Loss policies that provide coverage which protect the self-funded plan from very large claims. Specific Stop-Loss coverage protects against very large individual claims and aggregate Stop-Loss coverage protects the plan against large losses if the total volume of claims exceeds a predetermined level. For example, in the case of specific Stop-Loss coverage if a specific level of $35,000 has been set a claim for $50,000 would trigger the policy and the plan would pay only $35,000. The Stop-Loss would pay $15,000. Aggregate Stop-Loss works in a similar fashion for total claims incurred during the course of the Plan year. If total claims reach a pre set level called the attachment point the stop loss policy is triggered.
