Stop-loss insurance

Okay kiddo, imagine you have a balloon and you don't want it to pop. So, you tie a string to the balloon and hold onto the other end of the string. If the balloon starts to float away, you can pull on the string to keep it close to you and prevent it from popping.

Stop-loss insurance is kind of like a string for big companies or organizations that offer health insurance to their employees. They don't want to spend too much money if lots of people get really sick and need expensive medical treatments. So, they can buy stop-loss insurance from another company to help them keep their spending under control.

The stop-loss insurance works like this: let's say a company has 100 employees and they offer health insurance to all of them. If one or two employees get really sick and need expensive treatments, the company might have to spend a lot of money on their medical bills. But, if the company has stop-loss insurance, they can set a limit on how much money they are willing to spend on any one employee's medical bills. For example, they might say they will pay up to $100,000 for any employee's medical bills.

If an employee's medical bills exceed that amount, the stop-loss insurance company takes over and pays the remaining costs. This helps the company save money and prevents them from going broke because of one or two really expensive medical cases.

So, stop-loss insurance is like a safety net for big companies that offer health insurance. It helps them keep their spending under control and prevents them from having to pay out too much money if one or two employees get really sick.