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Stop-loss protection is about limiting the financial risk from very high medical claims. It acts like a safety valve: once an individual claim or the total claims for a plan reach a predetermined threshold, the stop-loss coverage pays to protect the employer or insurer from paying catastrophic costs. This is especially important for self-funded or large-group plans where the plan sponsor bears the actual claims risk. There are two common forms—specific stop-loss covers high-cost individual claims above a set amount, and aggregate stop-loss covers total claims across the policy period—both aiming to cap exposure rather than reduce premiums for everyone or to guard against unrelated events.