Specific Stop-Loss Policy
A policy protecting self-insured employers by capping the amount payable for any single high-cost health claim at a predetermined level.
What It Is
A Specific Stop-Loss Policy protects self-insured employers by reimbursing claims that exceed a predetermined per-person threshold known as the specific attachment point. When any single covered individual's claims exceed this amount during the policy period, the stop-loss carrier reimburses the employer for the excess.
For example, with a $150,000 specific attachment point, if an employee incurs $400,000 in medical claims during the year, the stop-loss carrier reimburses the employer for $250,000 (the amount above the $150,000 threshold).
Specific stop-loss is one of two types of stop-loss insurance used by self-insured employers. The other is aggregate stop-loss, which caps total plan costs rather than individual claim costs. Most self-insured employers carry both specific and aggregate stop-loss.
Why It Matters for Brokers
Self-funded health plans are the dominant model for mid-size and large employers. The specific stop-loss attachment point is one of the most important decisions in a self-funded plan design because it determines the employer's maximum exposure per claimant and significantly affects the total cost of the stop-loss program. Brokers advising self-funded employers must analyze claims data, demographic risk factors, and the employer's risk tolerance to recommend the appropriate specific attachment point.
Real-World Example
A 200-employee manufacturer self-insures their health plan with a $125,000 specific stop-loss attachment point. During the plan year, one employee undergoes a liver transplant with total claims of $850,000. The specific stop-loss carrier reimburses the employer $725,000 ($850,000 minus the $125,000 specific). Without stop-loss, this single claim would have consumed the employer's entire health benefit budget.
Common Mistakes
- 1Setting the specific attachment point too high to save on stop-loss premium, leaving the employer exposed to catastrophic individual claims.
- 2Not reviewing specific stop-loss for laser provisions that exclude or surcharge known high-cost claimants.
- 3Failing to coordinate the specific attachment point with the aggregate attachment point for comprehensive plan cost protection.
How brokerageaudit.com Handles This
BrokerageAudit supports self-funded health plan analysis by modeling specific stop-loss scenarios at different attachment points and comparing the premium savings against increased risk exposure.