Stop-loss lasering: what it is and how employers manage it
A laser sets a higher deductible for one person with a known high-cost condition. It can change the real risk a self-funded employer carries, so it deserves its own review.
Six Parts of the Laser Question.
Specific and Aggregate Stop-Loss
The two kinds of stop-loss coverage.
Stop-Loss and Claims Volatility
Why large claims drive renewals.
Alternative Funding With Stop-Loss
A side-by-side of self-funding backed by stop-loss and the other funding models.
Self-Funded and Stop-Loss Renewals
The self-funded renewal process, step by step.
From Renewals to Results
Carrying renewal work through to measurable outcomes.
Group Captives Explained
How group captives share claims risk.
Asking about lasers before you sign, not at the claim.
A laser is easiest to deal with at the start. When a self-funded employer receives a quote, it should include a list of any individuals with a modified deductible, the amount of each and the reason. Lasers can also be added at renewal when a new condition emerges, so the question comes back every year.
The employer’s exposure can then be added up. If a laser sets a higher deductible for one person, the employer carries that gap itself. Ask whether the laser applies to specific claims or all claims, whether it can be reduced at renewal and how it compares with a quote that has no lasers. A fair comparison puts the full exposure side by side.
Questions About Stop-Loss Lasers.
Straightforward replies for HR leaders and finance teams.
What Is a Laser?
A higher specific deductible that a stop-loss carrier applies to one named individual because of a known condition or claims history.
Why Do Carriers Laser?
To limit their exposure to a claim they expect, which shifts that expected cost back to the employer.
How Does a Laser Affect My Risk?
The employer pays more of that person’s claims before stop-loss reimburses, so the budget should reflect it.
Can a Laser Be Removed?
Sometimes, at renewal or when the underwriting facts change, so ask the carrier and compare other quotes.
Can a Small Employer Use This?
Frequently, yes, although the rules and the cost depend on group size. Tell us about your situation and we will explain what applies to you.
Do the Rules Change Each Year?
Some limits and requirements are reset every year, so look at the current numbers on our limits and compliance update pages.
Who Should We Involve?
Bring in your attorney or tax adviser for legal questions, your finance lead for cost, and a benefits adviser for design and vendor choices.
Can You Review What We Have Now?
Yes. Forward the plan documents and the renewal, and we will explain where the plan stands and which alternatives exist.
What Should We Send You First?
Begin with the plan summary you have today, the renewal and any stop-loss policy or vendor contracts.
How Do We Start?
Share the renewal along with the date by which you must decide. We will go through it and lay out your choices.
Can a laser be removed later?
Sometimes, depending on the carrier and the person’s claims history. Ask about the carrier’s policy and get any commitment in writing.
Does a laser affect the employee?
Generally the effect is on the employer’s financial exposure, not on the employee’s coverage. Confirm this in the plan documents and with your administrator.
Next step: upload your renewal, or speak with someone first. No charge and no commitment.
This page is background reading on stop-loss lasers and is not legal or tax advice. Questions particular to your plan belong with your attorney and tax adviser, and we will join those conversations.
The Law Behind This Topic.
Each law mentioned here links to the statute or regulation it comes from. Treat the page as general information and not legal advice; because rules shift, read the current text and consult your attorney.
Definitions Under ERISA (29 U.S.C. 1002)
ERISA’s definitions of an employee welfare benefit plan and related terms.
Employer Shared Responsibility (26 U.S.C. 4980H)
The Affordable Care Act rule that may reach large employers.
Related Funding Reading.
Funding Options Compared
The page this belongs to.
Employer Benefits Guides
The full section.
Level-Funded Compared With Fully Insured
A simpler step toward shared risk for smaller employers.
Reviewing Stop-Loss? Send Us the Quote.
Tell us the renewal and we reply with three things: whether it looks competitive, the openings we see, and five questions for your carrier. No fee, no strings.
Renewal letter
Current plan summary
Employer share by tier
Enrollment by tier
You need four documents, or six with 50 or more employees. Anything more only slows the review.
CFH is an independent benefits consulting firm that reviews the full program: spend, plan performance, risk exposure and administration.
Unhappy with your broker? Switching is quiet for employees and noticeable for you. →