Which plan often buys stop-loss coverage from a regular insurance company?

The employer self-funded plan is designed in such a way that the employer takes on the financial risk of providing health benefits to employees. In this arrangement, the employer pays for actual claims out of pocket rather than paying a fixed premium to an insurance carrier. To manage this risk and protect against the possibility of high claims or unexpected large healthcare expenses, employers often purchase stop-loss coverage from a regular insurance company. Stop-loss insurance provides a safety net by capping the total amount that the employer would need to pay for claims, allowing for more predictable costs.

This method of risk management is specifically relevant to self-funded plans, as these plans do not have the fixed premium structure typical of fully insured plans, which makes the employer potentially vulnerable to large or unexpected claims. The other options listed do not usually involve stop-loss coverage in the same way. For instance, a high deductible health policy typically involves a higher out-of-pocket expense for insured individuals, while health maintenance organizations (HMOs) and point of service (POS) plans are structured differently with fixed premiums and do not focus on the same risk management strategies as self-funded plans.