What is "excess loss insurance" designed to do?

Excess loss insurance is specifically designed to protect self-insured employers from the financial impact of catastrophic medical costs that exceed a predetermined threshold. This type of insurance acts as a safeguard, mitigating the risk associated with high and unpredictable healthcare expenses that could otherwise significantly burden a self-insured plan.

Self-insured employers take on the responsibility of paying for their employees' health claims directly, so if an unexpectedly high claim occurs, it can lead to substantial financial strain. By utilizing excess loss insurance, employers can limit their liability and ensure that they are covered for claims that go beyond their set retention level, providing more predictable budgeting and risk management.

This coverage is crucial for maintaining the financial health of self-insured plans while still allowing them to offer comprehensive health benefits to employees.