In Major Medical Expense policies, what is the objective of a Stop Loss provision?

• A. Limits an insured's out-of-pocket medical expenses
• B. Sets maximum policy term
• C. Helps lower premiums
• D. Provides lifetime maximum

Answer: (A)

The idea behind a Stop Loss provision in Major Medical policies is to cap the insured’s out-of-pocket costs for covered medical care within a policy year. It works with the deductible and coinsurance: once the insured’s total payments reach the stop-loss amount, the insurer pays 100% of remaining covered expenses for the rest of that year (up to the policy’s other limits). This protects the insured from devastating medical bills and helps with budgeting. It resets annually and is not about term length, premium reduction, or a lifetime maximum.