What does a stop-loss provision protect the insured from?

The stop-loss provision in an insurance policy is designed to protect the insured from excessive out-of-pocket expenses. Specifically, it limits the amount an insured individual must pay for covered medical services in a given period. Once the insured's medical expenses reach a predetermined threshold, the stop-loss provision activates, ensuring that the insurer will cover 100% of further eligible costs beyond that point.

This is particularly important in health insurance plans where high medical costs can lead to significant financial strain on the insured. The provision essentially provides a safety net, enabling individuals to manage their financial risk related to healthcare expenses effectively.

In contrast, other options refer to elements of insurance that do not directly relate to the concept of a stop-loss provision. High deductible payments refer to initial out-of-pocket costs before insurance coverage kicks in, while uncovered hospital visits and limited coverage on medications pertain to exclusions or limitations specific to a policy rather than the protective nature of a stop-loss provision.