What does aggregate stop-loss reinsurance do?

Aggregate stop-loss reinsurance is designed to protect employers from the financial risk of high claims costs across their group of employees. This form of insurance provides a safety net by setting an overall limit on the total amount of claims that the employer would need to pay in a given period, usually a plan year.

The correct choice emphasizes that aggregate stop-loss reinsurance reduces financial risk by establishing lower attachment points, which are the thresholds at which the insurance begins to cover costs. This helps employers maintain cash flow and budget stability, as they know that once claims exceed a certain cumulative level, the insurer will cover the excess. Consequently, this tool is critical for employers looking to manage the unpredictable nature of healthcare costs while still providing comprehensive benefits to employees.

The other options do not accurately describe the primary function of aggregate stop-loss reinsurance, which is specifically focused on financial risk management rather than individual employee claims limits, plan revisions, or cancellation notices.