Aggregate stop-loss insurance pays the cost of medical claims above a certain amount, known as the aggregate attachment point.
Aggregate stop-loss insurance is part of an employer’s self-funded health plan because it protects an employer sponsoring a self-funded health plan from catastrophic expenses. You can think of aggregate stop-loss insurance as a deductible for the employer’s plan. It places a ceiling on the employer’s total cost.
How does aggregate stop-loss insurance work?
An employer, in consultation with its professional employee benefits advisor, picks an aggregate attachment point. Once the employer has paid claims equal to the aggregate attachment point, the employer will be reimbursed by its aggregate stop-loss insurance for any additional claims. Aggregate stop-loss insurance limits the employer’s exposure to the aggregate attachment point.
The following is an example of how an aggregate attachment point works:
- Assume that the employer’s aggregate attachment point is $500,000.
- Once the employer has paid medical claims of $500,000 in the aggregate, the employer will be reimbursed by the stop-loss insurer for all additional claims.
- This is the case whether one employee has claims of $500,000 or multiple employees have individual claims that total $500,000 in the aggregate.
- With aggregate stop-loss insurance, the employer knows that its liability will be capped at $500,000.