Specific vs aggregate stop-loss: what each one covers.
Stop-loss insurance is what makes self-funding safe enough to try. Specific coverage protects against one very large claim, aggregate coverage protects against the whole group running high, and the attachment points decide how much risk you keep.
Two layers, two different risks.
Specific Stop-Loss
Reimburses the plan when one covered person’s claims exceed the specific deductible in the contract period. It protects against a single catastrophic claim.
Aggregate Stop-Loss
Reimburses the plan when total claims for the whole group exceed the aggregate attachment point, which is set above expected claims. It protects against a group that runs high overall.
Stop-Loss Reimburses the Plan
Stop-loss is a contract between the plan sponsor and the carrier. It pays the plan or employer, not employees or providers, and it does not change what participants are owed.
Attachment Points Set Your Risk
The specific deductible and the aggregate factor decide how much risk you keep. Lower attachments cost more premium and leave less volatility.
Premium Is Only Part of the Cost
The real cost is the stop-loss premium, the claims you keep under the attachments and the fees. A cheaper premium usually means a higher attachment or narrower terms.
Contracts Do Not All Cover the Same Things
Covered expenses, exclusions and the claims basis differ by contract. Read the contract, not the summary.
How a claim moves through the layers.
The picture below stays general, because every contract is different.
The Plan Pays the Claim First
The administrator pays eligible claims from plan funds as they are processed. Stop-loss reimburses afterward.
Specific Applies Per Person
Once one person’s paid claims pass the specific deductible, the excess is submitted for reimbursement under the contract.
Aggregate Applies to the Group
Total claims are measured against an aggregate attachment based on enrollment and expected claims. Amounts above it are reimbursable under the contract terms.
Reimbursement Comes After the Fact
The plan needs cash to pay first and recover later. That timing is part of cash-flow planning.
The Contract Basis Decides Which Claims Count
A 12/12 contract counts claims incurred and paid in the same twelve months. Other bases add run-in or run-out months and change what is covered.
Compare the Factor, Not Just the Premium
Aggregate attachments are set as a factor above expected claims. Two quotes with the same premium can protect very differently.
How we choose attachment points.
Start With Expected Claims
We build an expected-claims figure from your history and census, then test specific deductibles against the claimants in your data.
Price Several Combinations
We quote more than one specific and aggregate pairing, so you can see what each step of risk costs.
Match the Deductible to Your Cash
The specific deductible should be an amount the plan can fund in a bad month without disruption.
Three questions to settle.
What Is Excluded or Limited?
Ask for the exclusions, any claimant-specific limits and how high-cost categories such as transplants are treated.
How Quickly Are Reimbursements Paid?
Ask about submission deadlines, the documents required and typical payment timing.
Does the Contract Match the Plan Document?
Stop-loss pays for what the plan document says the plan covers. A gap between the two is a common source of denied claims.
Common Questions About Stop-Loss
Do I need both specific and aggregate?
Most employers carry both. Specific protects against one large claim and aggregate protects against many moderate ones. Some employers choose specific only and accept more volatility.
Does stop-loss pay my employees’ providers?
No. It reimburses the plan or employer after the plan has paid. Participants’ rights run against the plan, not the stop-loss carrier.
Is stop-loss the same as health insurance?
No. It insures the plan sponsor’s financial risk, and state rules on it vary by state.
What is a typical specific deductible?
It varies with group size and appetite for risk, so we do not quote a standard figure. We test several against your own claimants.
Who files the stop-loss claims?
The administrator typically prepares them. We help watch large claimants so a reimbursement is not missed or filed late.
What if the plan pays something the contract excludes?
Then the plan keeps that cost. This is why we compare the stop-loss contract to the plan document before you sign.
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.
Laws and rules referenced
29 U.S.C. § 1144(b)(2) — Treatment of self-funded plans and state regulation of insurance.
29 U.S.C. § 1102 — ERISA requires a written plan instrument, which the stop-loss contract should match.
This page is general information, not legal, tax or actuarial advice. Rules change and facts matter, so confirm your situation with counsel or a qualified advisor.
An independent employee benefits consulting firm. We look at the entire benefits program: cost, plan performance, risk and administration.
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