Hassle-Free Health Coverage: Stop-Loss Provision

The co-insurance requirement continues until you reach the policy's stop-loss point. This is the point at which the insurance company begins to pay 100 percent of a claim. Without a stop-loss, you would be responsible for 20 percent of an indefinite amount such as $100,000 or even $1 million.

The stop-loss amount will vary. It could be reached at $2,500, $5,000 or $10,000 of covered expenses.

For example, a plan with a $250 deductible and an 80/20 percent co-insurance split on the next $2,500 of covered expenses would result in a total out-ofpocket expense to the insured of $750-the $250 deductible plus 20 percent of $2,500. The stop-loss provision establishes the maximum out-ofpocket expense to you to be equal to the deductible plus the your co-insurance amount.

The out-of-pocket maximum is a major consideration when you are shopping for a policy. Regardless of the size of a potential claim, the most that you will have to pay out of your own pocket is the deductible and the co-insurance amount up to the stop-loss.

The stop-loss point is also a contributing factor in the policy's premium. The higher the stop-loss- the lower the premium. A stop-loss at $2,500 will cost more than a stop-loss at $10,000. Thus, if you want to keep the premium as low as possible, the formula becomes:

High deductible + low co-insurance + high stop-loss