Excess Coverage – Is it right for you?

Medical Stop Loss is a form of excess insurance coverage for self-insured programs.?

Self-Insuring is intended for the employer to pay for their claim costs and other related costs associated with the program, which may include but not limited to brokerage fees, administrative fees, medical network fees, etc.??Eligible policyholders should treat any excess coverage as financial protection in the event of a catastrophic loss to ensure that a single large event does not cause any significant financial hardship to the business.?

Therefore, if viewed as a financial tool, the employer would want to absorb the losses they anticipate occurring at the individual (deductible, specific, self- insured retention) level and within their annual financial means.?

The larger (higher) the deductible and aggregate limit, the lower the potential premium charge due to the increased risk the employer is undertaking.?Conversely, smaller (lower) deductibles will increase the premium.?The policyholder must determine their risk tolerance, while balancing their overall insurance costs.?

Policyholders who engage into any self-insurance type mechanisms generally have the following objectives / characteristics:

·??????Wants improved financial claim outcomes,

·??????Produce better coverage, service, etc.,

·??????Plans to capitalize on the cash-flow,

·??????Utilize the tax benefits due to the claims fund and other balance sheet related items,

·??????Desire to control / stabilize their insurance costs, and

·??????Understands the upside for self-insurance, as well as the downside.?

It’s becoming increasing more common to discover employers (policyholders) considering the excess coverage option due to reasons noted above, especially the upfront premium savings.?However, some employers, especially smaller companies with limited capital, may not fully realize the actual potential financial implications to their operation.

Generally speaking, large employers and those with strong financials are best suited to self-insurance.?USBenefits welcomes the opportunity to speak to you about your stop loss needs and explore alternative stop loss terms possibly for a better risk tolerance & insurance cost balance regardless of your size.??