Stop-Loss Insurance

Stop-loss insurance is what makes self-funding and level-funding viable for most employers. It doesn’t pay day-to-day claims — it kicks in when costs cross a defined line, protecting the employer from the kind of single catastrophic claim or unusually expensive plan year that could otherwise wipe out the savings of self-funding altogether.

There are two common forms: specific stop-loss, which caps the employer’s exposure on any one individual’s claims in a year, and aggregate stop-loss, which caps the employer’s total claims exposure across the whole group.

Why it matters when comparing plans: the specific and aggregate thresholds you choose directly affect your monthly cost and your risk exposure — lower thresholds mean more protection but higher premiums for the stop-loss coverage itself. This is one of the more technical decisions in structuring a self-funded or level-funded plan, and it’s an area where broker guidance tends to pay for itself.