Amounts Above the Limit
Losses beyond the stated limit stay with the employer. Knowing how the limit applies helps you judge what risk the protection leaves in place.
What to know.
A limit is a ceiling. A large penalty, several smaller losses or defense costs counted against the same figure can reach it. What is left stays with the employer.
Compare the limit with your own exposure: the penalties the law allows, the number of people covered and the number of services in the agreement.
Where to look next.
Compare Total and Per Claim
See how limits differ.
Size Your Exposure
Count penalty exposure.
Is the Limit Enough?
See how to size it.
Planning for the loss that exceeds the limit.
No limit is large enough for every outcome, so the useful exercise is to plan for the part above it. Estimate your worst plausible loss, subtract the limit, and decide how you will manage the difference. For many employers the answer is process: fewer chances for error, faster detection and earlier correction, since a corrected filing or notice reduces the penalty.
Another part is allocation. If defense costs sit inside the limit, a contested claim can consume it before any penalty is paid. If they sit outside, the limit goes further. Ask which applies, and ask whether the limit is a single pool for all services, because that decides how much is realistically available for any one claim.
Common questions on this topic.
Four questions to settle before you rely on it.
What happens if a loss is over the limit?
The employer bears the rest.
Can we buy more protection?
Ask. Nothing is promised until it is in writing.
Do defense costs reduce the limit?
Ask whether they sit inside or outside it.
How do we reduce the risk above the limit?
Good processes, timely data and a second set of eyes on dates.
Can an insurance policy cover the gap?
Some employers carry fiduciary liability or similar insurance. Ask your insurance advisor what such a policy covers and how it would work alongside a provider’s protection.
How do we reduce the size of a loss?
Correct errors promptly. Many penalties are lower when a failure is fixed quickly or when reasonable cause can be shown, so fast detection and response often matter as much as the limit.
Ready? Upload your renewal, or talk it through with someone first. No cost, no obligation.
General information about compliance service protections, not legal or tax advice. Plan-specific questions belong with your counsel, and we will bring them in.
Related guides.
What Hold-Harmless Protection Does Not Cover
The overview this page belongs to.
Compliance Services With Hold-Harmless Protection
What the protection is, what it covers and what to ask.
Send Hire and Termination Data on Time
The next question on the same topic.
Where the Rules Come From.
The laws and rules named on this page link to the statute or regulation they come from. This is general information, not legal or tax advice, and rules change, so check the current text.
COBRA Excise Tax (26 U.S.C. 4980B)
The tax on failures to meet COBRA continuation coverage requirements.
ERISA Civil Enforcement (29 U.S.C. 1132)
Includes the daily amounts a court may assess for failing to provide required notices.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents, two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
An independent employee benefits consulting firm. We look at the entire benefits program — cost, plan performance, risk and administration.
Switch to CFH. Unhappy with your broker? Your employees won’t notice. You will. →