Specific stop loss insurance (also called individual stop loss) is a form of protection purchased by self-funded employers to limit their financial exposure from high-cost medical claims incurred by a single covered individual.
Below is a detailed explanation of how it works in practice.
Specific stop loss protects against large claims incurred by one individual.
It reimburses the employer when claims for a single covered member exceed a predetermined dollar threshold called the specific deductible.
Example:
How payment works:
The employer’s exposure for that individual is capped at $75,000 (plus premium and fees).
The specific deductible is chosen by the employer and directly impacts premium cost.
Deductibles can range from $25,000 for small employers to $250,000+ for large employers.
Lower deductible:
Higher deductible:
The deductible resets each policy year.
Most eligible medical and pharmacy claims accumulate toward the specific deductible, including:
Claims must:
Specific stop loss creates:
Without specific stop loss, one premature baby or transplant could create multi-million-dollar liability.
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