Stop-Loss Provision

Definition - What does Stop-Loss Provision mean?

A stop-loss provision is a specific clause in a health insurance policy with a deductible and co-insurance arrangement that states that the insured need no longer pay any percentage of the medical expenses once their out-of-pocket expenses have reached the specific amount or limit indicated in the policy. Without this provision, the insured would indefinitely continue to share in their medical expenses.

Insuranceopedia explains Stop-Loss Provision

A health insurance policy with a co-insurance provision requires the insured to share in the costs of their medical expenses after they pay the deductible, but a stop-loss provision places a limit on these out-of-pocket expenses. It indicates the exact amount above which the insurance company would assume full payment of medical expenses. For example, in a policy with $4,000 stop-loss provision, the insured no longer needs to pay their coinsurance percentage as soon as they have paid $4000 in out-of-pocket expenses.

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