What is the role of the employer's plan document?
The employer's plan document defines the benefits offered to the employees and is critical in determining liability under the stop loss health plan. Because the employer has such great latitude in designing the plan, there may be elements in the document that are not included under the stop loss coverage. The plan document must be approved by the underwriter, for the carrier, in order to effect the stop-loss coverage. Changes in the plan document after its initial approval must be agreed to by the parties before their inclusion in the stop loss coverage.
How is loss defined?
Expenses are determined to be eligible for reimbursement based upon two criteria:
When are claims paid?
Stop loss insurance is provided on a reimbursement basis, much like health plans used to work. The employer is responsible for payment of all covered losses under a self funded plan. With the purchase of stop loss coverage, the employer is still responsible for all losses including those that exceed the deductible. After the losses have been paid, the employer will be reimbursed for the amount of the loss that exceeds the deductible. All reimbursements are paid directly to the employer, never to an employee or to a provider of services or supplies.
Specific claims, otherwise known as individual claims, are submitted and processed as soon as the deductible is met. Aggregate claims, however, are usually processed only after the close of the contract period. Occasionally, there are requests for what is known as a "monthly accommodation" on the aggregate. The employer, under this agreement, wants the year-to-date aggregate claims to be compared to the year-to-date aggregate deductible to determine if any amount is payable to the employer.