Stop loss policies are reimbursement policies.

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Multiple Choice

Stop loss policies are reimbursement policies.

Stop-loss policies function as reimbursement arrangements for a self-funded health plan. They shift the risk of very high claims from the plan sponsor to an insurer by agreeing to reimburse the plan for eligible claims once the plan has paid up to a deductible. The insurer then pays the remaining eligible costs up to policy limits, effectively restoring the plan’s funds after costly claims. There are two common forms: specific stop loss, which protects against an individual high claim, and aggregate stop loss, which protects against total claims for the group surpassing a set threshold. Because the arrangement pays back the plan for high-cost claims rather than directly providing benefits to employees, it is categorized as a reimbursement policy. This is why the statement is true.

Stop-loss policies function as reimbursement arrangements for a self-funded health plan. They shift the risk of very high claims from the plan sponsor to an insurer by agreeing to reimburse the plan for eligible claims once the plan has paid up to a deductible. The insurer then pays the remaining eligible costs up to policy limits, effectively restoring the plan’s funds after costly claims. There are two common forms: specific stop loss, which protects against an individual high claim, and aggregate stop loss, which protects against total claims for the group surpassing a set threshold. Because the arrangement pays back the plan for high-cost claims rather than directly providing benefits to employees, it is categorized as a reimbursement policy. This is why the statement is true.

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