Alternative Funding 101

Risk-free for the Sponsoring Employer

Our ERISA-based programs are specifically designed to protect the employer when claims are high. The answer lies in stop loss insurance coverage. Stop loss is an excess loss coverage policy that protects an employer when the claims of any one individual exceed a certain dollar amount (specific stop loss) or when the total claims of the group exceed a set level (aggregate stop loss). 

How Does Alternative Funding Work?

Specific Stop Loss Example

If any employee's claims exceed the specific deductible, stop-loss insurance covers it.

Each plan year, the employer selects a specific deductible for each employee (see green line).   If any individual employee incurrs medical claims during the plan year, and if these claims exceed the specific deductible threshold, the stop-loss insurance coverage picks up any claims above the threshold for the remainder of the plan year.

Aggregate Stop Loss Example

If your group’s total claims for the plan year are more than your aggregate deductible, stop-loss insurance coverage picks up!

Based on this example, claims are paid from the pre-funded claims fund. If the group's total claims for the plan year exceed the aggregate deductible, stop loss insurance covers the employer for the plan's claim costs for the remainder of the year.

Over time your claims fund can grow

Regardless of the carrier or the program, on an ERISA-based self-funded program there is the possibility of receving  money back from the plan if a group's overall claims are less than the aggregate deductible.

How your Monthly Payment is used