Regarding major medical plans, what does a higher stop-loss mean?

A higher stop-loss in major medical plans refers to the maximum amount that a policyholder must pay out-of-pocket for covered medical expenses before the insurance company starts to pay 100% of the costs. When the stop-loss is set at a higher amount, it usually indicates that the insurer is willing to cover a larger portion of costs beyond that threshold, which can be financially burdensome for the insured until they reach it.

The connection to premiums is important because when the stop-loss amount is higher, the insurance provider is taking on a greater risk of having to pay significant claims, leading them to charge higher premiums to offset that risk. This means that policyholders can expect to pay more upfront in terms of monthly premiums to account for the additional coverage beyond the stop-loss. Hence, a higher stop-loss generally translates to higher premiums for the insured.