Advanced Funding

Under a standard stop loss policy:

1. Employer pays a large claim in full.
2. Employer submits documentation to the carrier.
3. Carrier reviews and reimburses the amount above the specific deductible.
4. Reimbursement may take weeks.

For very large claims (e.g., $500,000+), this creates a temporary but significant cash flow burden.

An advanced funding endorsement eliminates or reduces that delay.

With an advanced funding endorsement:

Once an individual exceeds the specific deductible:

• The employer continues to fund claims up to the deductible.
• After the deductible is satisfied, the carrier begins advancing funds for eligible claims above the deductible as they are paid.
• The employer no longer has to front the full excess amount.

In many structures, the TPA coordinates payment so that:

• Employer funds up to the deductible.
• Carrier directly funds or wires the excess portion.

Specific deductible: $100,000
Total claim: $600,000

Sequence:

1. Employer pays the first $100,000.
2. Deductible satisfied.
3. Remaining $500,000 is funded by carrier as claims are processed.
4. Employer avoids fronting the $500,000.

Cash flow exposure is capped at the deductible rather than the full claim amount.