What Is Aggregate Stop-Loss Insurance?
The aggregate stop-loss insurance policy limits claim coverage to a certain amount. This coverage protects self-funded plans from catastrophic (particular stop-loss) or multiple (aggregate) claims. Aggregate stop-loss protects employers from unexpected claims. When claims exceed the aggregate limit, the stop-loss insurer pays or reimburses the employer.
Aggregate Stop-Loss Insurance
Self-funded insurance programs where an employer takes the financial risk of delivering healthcare benefits have aggregate stop-loss insurance. Unlike fully insured plans, self-funded businesses pay for each claim when it is presented. Stop-loss insurance resembles high-deductible insurance. An employer is responsible for deductible claim expenditures.
Traditional employee benefit insurance differs from stop-loss. Stop-loss only covers employers, not employees or health plan participants.
Uses of Aggregate Stop-Loss Insurance
Employers cover high-value claims with aggregate stop-loss insurance. Aggregate stop-loss insurance limits claims. When a maximum threshold is reached, the employer stops paying and may obtain refunds. Additional aggregate stop-loss insurance can be added to an existing plan or purchased separately. The barrier is based on attachment points, usually 125% of annual claims.
A variable aggregate stop-loss threshold is typical. The criterion changes as a percentage of an employer’s enrolled workers. This variable threshold is based on an aggregate attachment factor, crucial to stop-loss calculations.
Like high-deductible plans, most stop-loss policies feature low premiums. Since employers must pay over 100% of claims,
Total Stop-Loss Insurance Figures
Calculating stop-loss plan aggregate attachment:
- Step 1: Employer and stop-loss insurance provider estimate monthly employee claims average dollar value. Usually $200–$500 monthly, depending on the employer’s estimate.
- Step 2: Assume a $200 stop-loss plan value. Multiply this amount by the stop-loss attachment multiplier, usually 125%–175%. A $200 claims estimate and a 1.25 stop-loss attachment multiplier yield a $250 monthly deductible per employee.
- Step 3: Multiply the deductible by the employer’s monthly plan enrollment. The first-month deductible for an employer with 100 employees is $25,000 ($250 x 100).
- Step 4: Monthly enrollment may vary. Due to enrollment variety, aggregate stop-loss coverage may include monthly or annual deductibles.
- Step 5: Employers may pay different monthly amounts with a monthly deductible. An annual deductible requires the employer to pay a yearly fee based on projections from the first month of coverage. Stop-loss programs often have an annual deductible slightly lower than the 12-month total.
Conclusion
- Aggregate stop-loss insurance protects self-funded employers from unexpected claim payouts.
- Like high-deductible insurance, stop-loss insurance holds the employer accountable for claims below the deductible.
- The deductible or attachment for aggregate stop-loss insurance is based on an estimated monthly claim value, the number of enrolled employees, and a stop-loss attachment multiplier of 125% of projected claims.
