Contract Basics

Stop-loss contracts are generally underwritten for a 12-month period. Incurred and paid date criteria are conditions of the policy. Claims have to meet both the Incurred and Paid criteria in order to be covered.

There are several types of contracts:

1. Paid Contract: (12/12) - Incurred in 12 month contract period / paid in
12 month contract period

Example: Policy Period: 1/1/03 - 12/31/03
Incurred Dates: 1/1/03 to 12/31/03; Paid Dates: 1/1/03 to 12/31/03

2. Run-out Contract: (12/15) - Incurred in 12 month contract period / paid in 15 month period

Example: Policy Period: 1/1/03 to 12/31/03
Incurred Dates: 1/1/03 to 12/31/03; Paid Dates: 1/1/03 to 3/31/04

The above are examples of run-out policies

3. Run-in Contract: (15/12) - Incurred in 15 month period / paid in 12 month contract period

Example: Incurred Dates: 10/1/02 to 12/31/03, Paid Dates: 1/1/03 to 12/31/03

Other forms of run-in and run-out coverage are available.