In simple terms, an “attachment point” is the point at which one person’s liability for claims ends and another person’s begins.
However, the meaning of an attachment point depends upon the context in which it is used. For example, in the context of self-funded health plans, the attachment point is the amount that the employer has to pay before the employer’s stop-loss insurance kicks in. There are two types of attachment points in stop-loss insurance – specific and aggregate.
Stop-loss insurance protects an employer from catastrophic claims, both on a per participant basis and for the plan as a whole. Specific stop-loss insurance covers claims incurred by a single participant above a certain amount. That amount is the specific attachment point.
The aggregate attachment point limits an employer’s exposure for medical claims incurred by the plan as a whole.
Attachment points can vary from policy to policy and are subject to negotiation between the insured and the insurer. They are a product of the insured’s appetite for risk. However, in the context of self-funded health plans, some states impose minimum attachment points.