In Major Medical Expense policies, what is the purpose of a Stop Loss provision?

The Stop Loss provision in Major Medical Expense policies serves a vital purpose by limiting the amount of out-of-pocket medical expenses that an insured individual must pay. When a policy includes a Stop Loss provision, it establishes a cap on the total expenses that the insured will have to bear for covered medical services during a specific period, typically a policy year. Once the insured's out-of-pocket expenses reach this limit, the insurance company will cover 100% of the remaining costs for covered services.

This feature is particularly important as it provides financial protection to policyholders, ensuring that they do not face excessive financial burden due to high medical costs, which can arise unexpectedly from serious illnesses or injuries. It helps to alleviate concerns around catastrophic health events that could lead to significant medical bills, thereby providing a sense of security regarding their healthcare expenses.

The other options do not accurately reflect the function of the Stop Loss provision. While increasing premium payments, restricting benefit amounts, or reducing coverage duration are relevant to the structure of a health insurance policy, they do not describe the primary purpose of the Stop Loss provision, which specifically focuses on limiting the insured's out-of-pocket expenses.