How Stop Loss Insurance Works

Stop Loss insurance limits a self-funded employer’s health plan liability to a specified amount. Find out how Stop Loss coverage can be a valuable tool for self-funded employers seeking to protect the financial integrity of their plan.

Understanding Stop Loss Insurance 

Stop Loss insurance helps to protect self-funded employers from the financial loss associated with catastrophic claims – both on an individual level and across the covered population. The coverage is handled through a contract between the carrier and the employer.

Stop Loss coverage helps protect self-funded employers from paying extremely high-dollar claims for medical situations like cancer, preterm birth, transplants, gene therapies and other high-dollar pharmaceutical treatment options and more.

Stop Loss Insurance Types

Stop Loss insurance comes in two forms — Specific and Aggregate.

Specific Stop Loss

Specific Stop Loss reimburses the employer for a catastrophic claim on any covered individual during a contract period. The employer must first satisfy the “per person” deductible before reimbursement of claims can begin.

Aggregate Stop Loss

Typically purchased with Specific coverage, Aggregate Stop Loss reimburses the employer for total plan claims that exceed expected plan claims by more than an established percent.

Eligible claim expenses an employer must pay before the Aggregate benefit will be reimbursed are determined through an Aggregate Attachment Point, also known as a corridor. This percentage is used to determine the monthly Aggregate deductible amount for the policy term, and the group is expected to be able to fund the anticipated claims, plus the additional amount (corridor).

Creating the Right Plan

Stop Loss contracts have a wide variety of options and riders available to help with cash flow challenges, risk tolerance levels and management of long-term claim situations.


Stop Loss Insurance Resources

If you’d like to access additional resources to help potential self-funded clients learn more about Stop Loss, check out our Resources. You will find sales materials, articles, infographics, videos and more.


Stop Loss Basics

Access key details about Stop Loss protection in one convenient sheet.