Aggregate Stop-Loss Insurance

What Does Aggregate Stop-Loss Insurance Mean?

Aggregate stop-loss insurance is a type of protection used by employers as coverage for risk against a high volume of claims under a specific coverage in their group employee benefit policy.

Unlike conventional benefits in employee group plans, stop-loss insurance only covers the employer and provides no direct coverage to employees.

Insuranceopedia Explains Aggregate Stop-Loss Insurance

Aggregate stop-loss insurance is specifically for self-funded insurance plans in which the employer assumes the financial risk of healthcare benefits to employees. This type of insurance is similar to a high-deductible insurance policy where the employer remains responsible for all claim expenses under the deductible.

Stop-Loss Insurance helps employers of self-funded plans cap the amount they will be required to pay for an excess of claims and requires them to pay a prescribed percentage amount instead of paying an annual premium.

When a maximum dollar amount gets exceeded, the employer no longer needs to pay for claims and starts to receive reimbursement. The maximum dollar amount or threshold is usually variable and calculated based on a percentage of the anticipated annual costs.

This aggregate coverage usually includes medical and dental benefits for full-time employees. It can also consist of short-term disability, vision care, as all specifics get negotiated at the time of policy purchase.