Ace the 2025 CPHRM Challenge – Rock Your Health Care Risk Management Skills!

The purpose of stop-loss coverage in insurance is to limit losses beyond a specified amount. This type of insurance is primarily used in health care settings, where it provides protection to organizations against excessively high claims that exceed a predetermined threshold. For instance, if a health care provider experiences a financial burden due to unusually high medical expenses for a small number of patients, stop-loss coverage will ensure that the provider’s losses do not continue to escalate indefinitely. By setting a cap on the total liability, stop-loss coverage helps organizations manage their risk and stabilize their financial planning.

This is crucial for organizations as it balances the risk they assume while allowing them to provide comprehensive health coverage. It promotes financial sustainability by protecting against catastrophic losses, thereby ensuring that health care entities can continue their operations without the fear of overwhelming financial strain from a few high-cost cases.