Stop-loss basics for 100 to 500 employees

Short answer. Stop-loss is insurance the employer buys when its health plan is self funded or level funded. Specific stop-loss caps what the plan pays for any one person in a year. Aggregate stop-loss caps the plan’s total claims for the year. What you’re really buying is in the terms: the per-person deductible, the aggregate attachment point, the contract basis, and how renewal treats a large claimant.

Why it comes up at 100 to 500

KFF’s 2026 survey found 71% of covered workers are in self funded plans: 25% at firms with 10 to 199 workers and 85% at firms with 200 or more. Another 38% of covered workers at the smaller firms are in level funded plans. Somewhere between 100 and 500 employees, the funding question shows up at renewal whether you ask it or not.

The two parts

Specific stop-loss caps what the plan pays for one person. Illustrative example only: with a $50,000 specific deductible, a $230,000 claim costs the plan $50,000 and stop-loss reimburses $180,000.

Aggregate stop-loss caps the plan’s total claims for the year, at an attachment point set above expected claims. It’s the ceiling on a bad year.

The terms that decide what you’re buying

• Contract basis. 12/12, 12/15, 24/12: which incurred and paid months count. It decides what’s covered if you leave.
• Lasers. A higher deductible on one named person at renewal. Ask whether new lasers can be added, and whether the renewal rate is capped.
• Run-out. Who pays claims incurred before the plan ends but paid after.
• Cash flow. When reimbursement arrives, and whether the carrier advances it on a large claim.
• Reporting. What claims data you’ll get, and how often.

Questions to ask before you move

1. What’s the most the company could owe this year: fixed costs plus the aggregate attachment point?
2. What happens to unpaid claims if we leave?
3. Can a laser be added at renewal?
4. What does the broker earn on the stop-loss, in dollars?

Side by side with your current plan: how to compare a renewal to the market. The basics of the choice: level funded vs fully insured.

What is stop-loss insurance?

A policy the employer buys to cap its risk on a self funded or level funded health plan. It reimburses the plan when claims pass set limits. It doesn’t insure employees directly.

What's the difference between specific and aggregate stop-loss?

Specific caps the plan’s cost for any one person in the contract period. Aggregate caps the plan’s total claims for the period, usually set above expected claims.

What is a laser?

A higher deductible set for one named person, usually at renewal, after a large claim. Ask whether new lasers can be added at renewal, and whether the renewal rate is capped.

What does 12/15 or 24/12 mean?

The contract basis: which months of incurred claims and paid claims count. 12/15 counts claims incurred in the 12-month period and paid within 15 months. The basis decides what’s covered if you leave.

Is stop-loss part of a level funded plan?

Yes. A level funded plan packages self funding, stop-loss and administration into one monthly payment. KFF describes it as a small self funded part combined with stop-loss.

Does a broker have to disclose pay on stop-loss?

Yes. Stop-loss is one of the services listed in the federal broker and consultant pay disclosure rule (ERISA section 408(b)(2)(B), explained in DOL Field Assistance Bulletin 2021-03).

I built and sold a health insurance agency: grew it to 60 agents in about 3 years, then sold it. Licensed insurance agent since 2014: Texas license 2501238, NPN 17369817.