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🛡️ '''Medical stop-loss''' is a form of [[Definition:Reinsurance | reinsurance]]-like protection purchased by employers who [[Definition:Self-insurance | self-fund]] their employee health benefit plans, designed to cap the financial exposure that arises when [[Definition:Claim | claims]] exceed expected levels. Unlike fully insured group health plans where the [[Definition:Insurance carrier | carrier]] assumes all claims risk, self-funded employers bear the cost of employee medical claims directly — and medical stop-loss acts as the safety net that prevents catastrophic losses from destabilizing the employer's finances. The product is typically underwritten by specialized [[Definition:Stop-loss carrier | stop-loss carriers]] or divisions within larger insurers and comes in two forms: [[Definition:Specific stop-loss | specific]] (individual) and [[Definition:Aggregate stop-loss | aggregate]].

💰 Specific stop-loss triggers when a single covered individual's claims exceed a predetermined [[Definition:Attachment point | attachment point]] — for instance, $250,000 in a plan year — at which point the stop-loss carrier reimburses the employer for claims above that threshold. Aggregate stop-loss, by contrast, activates when the employer's total plan claims surpass a corridor, usually expressed as a percentage above the expected annual claims liability. Employers work with [[Definition:Third-party administrator (TPA) | third-party administrators]] and [[Definition:Benefits consultant | benefits consultants]] to structure these layers, balancing the [[Definition:Premium | premium]] cost of lower attachment points against the risk tolerance of higher self-insured retentions. [[Definition:Actuarial analysis | Actuarial analysis]] of the employer's historical claims data, demographic profile, and plan design drives the pricing and terms.

📈 The medical stop-loss market has grown substantially as more mid-size and even smaller employers move toward self-funding to gain greater control over health plan costs and [[Definition:Claims data | claims data]]. This trend has attracted [[Definition:Insurtech | insurtech]] entrants that use [[Definition:Predictive analytics | predictive analytics]] and real-time claims monitoring to offer more dynamic stop-loss products. For carriers and [[Definition:Managing general underwriter (MGU) | MGUs]] operating in this space, disciplined [[Definition:Underwriting | underwriting]] is essential — a single plan with an unexpectedly high number of catastrophic claims, such as organ transplants or specialty drug therapies, can produce significant [[Definition:Loss ratio (L/R) | loss ratio]] volatility.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Self-insurance]]
* [[Definition:Specific stop-loss]]
* [[Definition:Aggregate stop-loss]]
* [[Definition:Attachment point]]
* [[Definition:Third-party administrator (TPA)]]
* [[Definition:Excess of loss reinsurance]]
{{Div col end}}

Definition:Medical stop-loss - Revision history

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