Glossary

Stop-loss insurance

Insurance that reimburses an employer with a self-funded health plan when one person's claims, or the plan's total claims, pass a set dollar level.

Also called: medical stop-loss, excess loss insurance, specific stop-loss, aggregate stop-loss

Stop-loss insurance caps what an employer can lose on a self-funded health plan. The employer pays employees' medical claims from its own funds, and the stop-loss carrier reimburses the employer, not the employees, once claims cross a threshold. It comes in two layers. Specific (individual) stop-loss pays when one person's claims exceed a deductible. Aggregate stop-loss pays when total plan claims exceed an attachment point, commonly set at a percentage of expected claims such as 125%.

Say an employer has a $100,000 specific deductible and expects $2,000,000 of claims, so aggregate attaches at $2,500,000 (hypothetical figures). One employee's $450,000 claim leaves the plan with the first $100,000 and the carrier with $350,000. If the remaining claims push the year's total past $2,500,000, aggregate pays the excess.

The contract decides what counts. Terms such as the contract basis (claims incurred and paid in the same 12 months, or with a longer run-out), the definition of covered claims and "lasering," where a known high-cost member gets a higher individual deductible at renewal, change the real protection. Some states regulate attachment points for small groups. The guide on stop-loss insurance for self-funded health plans: specific, aggregate and the fine print covers the contract terms, and level-funded plan shows the bundled version for small employers.

Last reviewed October 10, 2026

In the index now

Related terms

Self-funded health plan A group health plan where the employer pays employees' claims itself rather than paying an insurer premiums, usually backed by stop-loss insurance. Level-funded plan A self-funded health plan with one fixed monthly payment covering expected claims, fees and stop-loss premium, with possible refunds if claims run low. Attachment point The loss amount at which an excess, umbrella or reinsurance layer starts paying, normally the top of the underlying limits or retention beneath it. Retention The share of a loss a business pays itself, through a deductible, self-insured retention or captive, before insurance responds. Third-party administrator (TPA) An outside firm hired to run claims and administration for a self-funded plan, captive or self-insured program without taking on the insurance risk.

Related guides

Association health plans and MEWAs: what small employers need to know How association health plans and multiple employer welfare arrangements work after DOL rescinded the 2018 AHP rule, the Form M-1 duty, and how to vet one. Cell captives and protected cell companies: how renting a cell works A cell captive lets a business insure its own risks in a segregated account of a sponsor's licensed insurer. How cells are protected, taxed, priced and exited. Fully insured vs self-funded health plans: which fits your business How fully insured and self-funded health plans differ in risk, cash flow, regulation and data, with an example and the questions to answer before switching. Why group health renewals rise and how to negotiate them What drives group health renewal increases in 2026 and 2027, with named cost projections, and a step-by-step plan to challenge, shop and restructure a renewal. Level-funded health plans: how they work, who they suit and the catches A level-funded plan is a self-funded plan with a fixed monthly payment, built-in stop-loss and a possible refund. How it works, who it suits, and what to check. Group captives for medical stop-loss: how employer health captives work How a group captive layers into medical stop-loss for self-funded employers, what members put up and share, the trade-offs, and what to check before joining.

Related insurers

Crum & Forster Fairfax's Morristown specialty carrier: admitted and E&S casualty, construction, property, surety and accident and health, sold through agents and wholesalers. Fairfax Financial Toronto-based Fairfax owns Crum & Forster, Allied World, Zenith and Hudson: specialty, excess and surplus lines and workers' comp sold through brokers. Nationwide Columbus mutual writing small business, middle market, agribusiness, E&S and program business through independent agents; No. 2 in U.S. farmowners. QBE North America U.S. arm of Australia's QBE, writing specialty casualty, financial lines, construction, large-account property, programs, A&H and crop via brokers and agents. Skyward Specialty Houston-based specialty insurer writing E&S, surety, professional lines, energy, programs, captives and stop-loss; bought Lloyd's platform Apollo in 2026. Swiss Re Corporate Solutions Swiss Re's commercial insurance arm: high-capacity property, casualty, professional, surety, stop loss and captive fronting for large U.S. companies.