What is a stop loss limit?

A stop loss limit refers to the maximum amount that an insured individual pays out of pocket for covered healthcare expenses, including coinsurance, before their health insurance plan begins to cover 100% of the remaining costs for the rest of the policy year. This mechanism is designed to protect insured individuals from excessive financial strain due to high medical expenses, ensuring that there is a cap on their financial responsibility.

Once the insured reaches this limit, the insurance company is obligated to cover all additional costs for covered services, which supports the policyholder in managing unexpected healthcare expenses.

Understanding this concept is crucial for both insurance professionals and policyholders, as it directly relates to the financial protection offered by a health insurance plan.