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🛡️ '''Stop-loss insurance''' is a coverage product designed to protect employers who [[Definition:Self-insurance | self-fund]] their employee [[Definition:Health insurance | health benefit]] programs from catastrophic or unexpectedly high aggregate claims. When a company chooses to pay employee medical claims directly rather than purchasing a fully insured [[Definition:Group insurance | group health plan]], it assumes significant financial exposure; stop-loss insurance caps that exposure by reimbursing the employer once claims exceed a predetermined threshold. The product comes in two primary forms — [[Definition:Specific stop-loss insurance | specific]] (or individual) stop-loss, which triggers when a single claimant's costs surpass a set [[Definition:Attachment point | attachment point]], and [[Definition:Aggregate stop-loss insurance | aggregate]] stop-loss, which activates when total plan claims exceed a defined ceiling.

⚙️ An employer working with a [[Definition:Third-party administrator (TPA) | third-party administrator]] to manage its self-funded plan will typically purchase a stop-loss policy from a [[Definition:Insurance carrier | carrier]] or [[Definition:Managing general underwriter (MGU) | managing general underwriter]] specializing in the space. The specific attachment point might be set at $250,000 per individual per plan year, meaning the stop-loss [[Definition:Insurer | insurer]] reimburses the employer for any single member's eligible claims exceeding that amount. The aggregate attachment point is usually calculated as a percentage — often 120% to 125% — of expected total plan claims, providing a safety net if the overall claims experience turns adverse. [[Definition:Underwriting | Underwriters]] evaluate the employer's group demographics, historical claims data, and plan design to set these thresholds and the corresponding [[Definition:Premium | premium]], adjusting for factors like high-cost claimants with known chronic conditions.

💡 For employers navigating the economics of self-funding, stop-loss insurance is the mechanism that makes the entire arrangement viable. Without it, a single organ transplant, premature birth, or cancer diagnosis could inflict hundreds of thousands of dollars in unbudgeted expense on the plan sponsor. The market for stop-loss coverage has grown substantially as more mid-sized employers have moved toward self-funded arrangements seeking greater control over plan design and [[Definition:Claims data | claims data]] access. [[Definition:Insurtech | Insurtech]] platforms have entered this space as well, using advanced [[Definition:Predictive analytics | predictive analytics]] and real-time claims monitoring to price stop-loss policies more accurately and flag emerging high-cost cases earlier — giving both the employer and the stop-loss carrier a better chance of managing costs proactively.

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

Definition:Stop-loss insurance - Revision history

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