So what exactly is medical stop loss insurance? It’s defined as protection purchased by the self-insured (and the occasional managed care arrangement) against the risk of large losses or severe adverse claim experience. Simply put, it’s an extra buffer against deductibles that are high enough to prompt a nose bleed. Medical stop loss insurance is always a boon to the self-insured or under insured, especially with mandatory health care looming on the horizon. It’s important to remember that mandatory health care doesn’t necessarily mean quality health care. Depending on the fiscal strength of a given company, (and by the by this is an unlikely scenario, but unlikely does NOT denote impossible) you could very well be compelled to devote forty to fifty per cent of your wages to a mandatory healthcare package, be responsible for outrageous copays, have a two-thousand dollar deductible, and still for all intents and purposes legally qualify as insured. Medical stop loss is there to do just what you can infer from the name; stop the loss. In essence, medical stop loss insurance is insurance against the possibly high deductible of your current insurance package. For the self-insured, this means that for a fraction of the cost of your deductible, you can have the peace of mind knowing that your deductible, should you need to use your insurance, will not drive you into the poorhouse. For the company offering the insurance, a blanket medical stop loss policy means that they can offer a better insurance package to their employees at a better rate, thereby keeping their employees both healthy and happy.

Medical reinsurance is another tool companies have at their disposal to combat the financial burden of offering a quality health care package. Medical reinsurance is precisely what it sounds like; insurance for third-party payers (the insurance offering company) to spread their risk for losses (being claims paid) over a predetermined amount. By example, if you’re insured by company “A,” they can take out a reinsurance policy from company “B” to cover potential losses and claims up to a specified dollar amount, thus reducing their potential capital losses should the need arise to pay out an exorbitant amount for claims. In cases where large companies employ thousands of workers and insure them all under the same plan, medical reinsurance becomes standard. To scale it down a bit, let’s say a company employs a hundred people in an office where the windows don’t open, and the air is recirculated. It is common knowledge that if one employee falls ill, so too does the rest of the office. Medical reinsurance would allow the health care providing company to pay out hundreds of dollars in claims for the entire office falling ill, rather than thousands. This keeps the premium down for the immediate client (the company offering insurance to their workers) as well as the medical insurance providing company.

Kris Leeds is a freelance writer for Elite Underwriting, a leading provider of medical reinsurance, medical stop loss insurance, and many other quality underwriting products and services. For more information about stop loss mgu, please visit at Elite Underwriting online.