What Does The Term Stop Loss Mean For Low Cost Health Insurance?

By Robert Fredricks Posted in Health Insurance News

When comparing health insurance plans, simply looking at the monthly premium charged for each plan will not give you a true picture of the overall cost of the plan. There are several common factors of typical health insurance plans which must be considered to accurately understand the cost of each plan.

Many Factors Are Involved In Determining The True Cost Of A Health Insurance Plan

The most obvious factor is the plan premium. The other factors all pertain to what portion of your health care costs the health insurance plan will actually pay. These include what the plan will cover and what it will not cover, including procedures and services, medications, doctors, and facilities. Next, for covered items how the cost will be shared between the the health plan and the person insured.

Stop Loss Sets The Insured Person’s Liability For Covered Items

A stop loss provision in low cost health insurance determines at what point, if any, the health plan will begin paying 100% of covered expenses. The stop loss provision sets a maximum dollar amount the person insured will pay of their covered health care expenses. The premium paid for the health insurance is over and above this amount.

As an example if the plan has a $500 deductible, an 80/20 cost share and a stop loss provision limiting the insured person’s liability to $5000, once the person insured has paid the first $500 of covered expenses due to the deductible plus another $4500 of covered expenses as their required 20% share, the plan will pay 100% of all covered expenses for the remainder of the plan year.

If the person insured suffers a catastrophic illness or major surgery resulting in high medical expenses, this person could be left with huge medical bills if their health insurance does not include a stop loss provision. If the plan is the same as above but without the stop loss provision and the total covered expenses were $100,000, the plan would pay $79,600 with the remaining $20,400 to be paid by the insured person.

Related posts:

  1. What Does The Term Out Of Plan Mean For Low Cost Health Insurance?
  2. What Does Lifetime Maximum Benefit Mean For Cheap Health Insurance?
  3. What Is A High Deductible Health Insurance Plan?
  4. What Is An Open Ended HMO For Low Cost Health Insurance?
  5. What Is A Consumer Directed Health Insurance Plan?

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