What does a stop-loss provision in health insurance do?

A stop-loss provision in health insurance serves to limit the insured's out-of-pocket medical expenses. This feature is designed to provide financial protection by capping the total amount that an individual has to pay for healthcare services within a certain period, typically a calendar year. Once the insured's out-of-pocket costs reach the specified stop-loss amount, the insurance plan will cover all additional medical expenses without further cost to the insured, thus preventing excessive financial strain due to high medical bills.

The stop-loss provision is particularly important for protecting individuals from unexpected and potentially catastrophic health expenses, ensuring that they do not face endless financial obligations in the case of significant medical issues. This kind of provision is common in many health insurance plans and is crucial in promoting access to necessary medical care without imposing an undue financial burden on the insured.