What is the purpose of stop-loss insurance that is used with self-insured group medical expense plans?

Question

Quizplus · Accepted Answer

Stop-loss insurance is used with self-insured group medical expense plans to limit the employer's financial exposure in the event of catastrophic losses. This means that if the claims expenses exceed a certain amount (known as the "stop-loss limit"), the insurance company will start paying the excess amounts. This allows employers to self-insure for smaller losses, while also protecting themselves against larger, unexpected losses.

What Is the Purpose of Stop-Loss Insurance That Is Used