# Stop-loss health insurance examples. Five claims, worked out in dollars.

Source: https://ethosbenefits.com/benefits-101/stop-loss-examples
Type: Benefits 101
Topic: Stop-loss insurance
Author: Meghan Anderson, Account Executive
Reviewed by: Patrick Ansara, Partner and Director of Client Operations
Publisher: Ethos Benefits
Published: 2025-07-03
Last updated: 2026-11-03
Cite as: "Stop-loss health insurance examples," Ethos Benefits, https://ethosbenefits.com/benefits-101/stop-loss-examples, updated 2026-11-03.

**Short answer:** A self-funded employer with a $50,000 specific deductible pays the first $50,000 of one person's claims, and stop-loss reimburses the rest. If that person's claims reach $220,000, the carrier pays $170,000. Aggregate stop-loss works the same way for total plan claims above a group-wide attachment point.

A self-funded employer pays its employees' health claims from its own funds, so one serious illness or injury can add hundreds of thousands of dollars to a plan year. Stop-loss insurance reimburses the plan when claims pass set limits. This page walks through five examples in dollars. For the definitions behind them, start with [how stop-loss insurance works](https://ethosbenefits.com/benefits-101/stop-loss-insurance).

All numbers below are round, illustrative examples, not quotes or typical rates. Real policies vary by carrier, group and contract, and the policy wording always controls.

## The terms behind every example.

Each example uses the same handful of terms.

| Term | What it means |
| --- | --- |
| **Specific deductible** | The amount the plan pays for one person's claims in the policy year before specific stop-loss reimburses. Also called the specific attachment point. |
| **Aggregate attachment point** | The total claims the plan pays for the whole group before aggregate stop-loss reimburses, usually set as a percentage of expected claims. |
| **Contract basis** | Two numbers, such as 12/12 or 12/15: the months in which a claim must be incurred and the months in which it must be paid to count. |
| **Laser** | A higher specific deductible, or an exclusion, for one person with known high costs. |
| **Aggregating specific deductible (ASD)** | An extra layer the plan pays above the specific deductible, across all large claimants, before specific reimbursement starts. |

The plan pays claims first and the carrier reimburses the plan afterward, so the employer needs cash on hand to carry a large claim until the reimbursement arrives. Some carriers offer advance funding for very large claims.

## Example 1: what does stop-loss pay on a $220,000 claim?

Stop-loss pays the part of one person's claims above the specific deductible, here $170,000 of a $220,000 claim. In this example, an 85-employee company has a $50,000 specific deductible. One employee is diagnosed with leukemia, and that person's eligible claims for the policy year reach $220,000.

| Item | Amount |
| --- | --- |
| Specific deductible | $50,000 |
| Employee's eligible claims for the year | $220,000 |
| Plan pays (up to the deductible) | $50,000 |
| Stop-loss reimburses ($220,000 minus $50,000) | $170,000 |

In plain terms, the company's plan carries the first $50,000 for that employee and the carrier pays the remaining $170,000. The employee notices none of this. Their benefits, deductible and out-of-pocket maximum are set by the plan, not by the stop-loss policy. The specific deductible applies to each person separately, so a second large claimant would start their own $50,000 count.

## Example 2: what happens in a high-claims year?

Aggregate stop-loss reimburses the plan when total claims for the group pass the aggregate attachment point. Using the same company, expected claims for the year are $500,000, and the aggregate attachment point is set at 125 percent of expected claims, or $625,000.

This year runs high. Several surgeries and ongoing treatments push total plan claims to $810,000, including the $220,000 claimant from Example 1. Only the first $50,000 of that person's claims counts toward the aggregate, because specific stop-loss already reimburses the rest.

| Item | Amount |
| --- | --- |
| Expected claims | $500,000 |
| Aggregate attachment point (125 percent of expected) | $625,000 |
| Total plan claims for the year | $810,000 |
| Less amount reimbursed under specific stop-loss | $170,000 |
| Claims that count toward the aggregate | $640,000 |
| Aggregate stop-loss reimburses ($640,000 minus $625,000) | $15,000 |
| Plan's net claims cost for the year | $625,000 |

In plain terms, the company's claims cost for the year is capped at $625,000 plus its stop-loss premiums, even though the plan paid $810,000 in claims. Aggregate protection guards against many mid-sized claims adding up, while specific protection guards against one very large claim. Aggregate reimbursement is usually settled after the policy year ends, once the claims have been counted, so the plan carries the overage until then.

The attachment point percentage is set in the policy, and some states set a floor. The NAIC model act, which states may adopt or change, bars aggregate attachment points below 120 percent of expected claims for groups of 50 or fewer and below 110 percent for groups of 51 or more.

## Example 3: a claim incurred in one year and paid the next.

Whether a late-paid claim is reimbursed depends on the contract basis. In this example the policy year runs January 1 to December 31, 2025, with a $50,000 specific deductible. One member has $40,000 of claims paid during 2025, then a $90,000 hospital stay on December 15, 2025. The TPA pays that bill on February 10, 2026, after the policy year has ended. The member's total claims incurred in 2025 are $130,000.

| Contract basis | Does the $90,000 count? | Reimbursement |
| --- | --- | --- |
| **12/12**, then a move to a new carrier on a 12/12 contract | No. It was paid after the 2025 policy ended, and the new 12/12 contract covers only claims incurred in 2026. | $0 from either carrier |
| **12/15** | Yes. It was incurred in 2025 and paid within the 3-month run-out, which ends March 31, 2026. | $80,000 ($130,000 minus $50,000) |
| **Paid**, renewed with the same carrier for 2026 | It counts toward the 2026 policy, where claims are measured by paid date and the specific deductible starts over. | $40,000 ($90,000 minus $50,000), if the member has no other 2026 claims |

In plain terms, the 12/12 contract left an $80,000 hole because the claim fell between the old contract's end and the new contract's start. That gap between run-out and run-in is where reimbursements are most often lost. A 12/15 contract closes it with three months of run-out, though a bill paid in April 2026 would miss that window too. A paid contract or a contract with run-in, such as 24/12, moves the late claim into the next policy year instead. If the plan ends or moves to fully insured coverage, a **terminal liability** option adds run-out coverage for claims incurred before termination and paid afterward.

Contract basis also changes price, so compare quotes on the same basis before comparing premiums.

## Example 4: how does a laser change the math?

A laser raises the specific deductible for one person, so the plan carries more of that person's claims. In this example the group's specific deductible is $50,000. At renewal, the carrier lasers one member with a known chronic condition at $200,000. That member's claims for the year reach $260,000.

| Item | No laser | Lasered at $200,000 | Excluded entirely |
| --- | --- | --- | --- |
| Member's deductible | $50,000 | $200,000 | Not covered |
| Member's eligible claims | $260,000 | $260,000 | $260,000 |
| Plan pays | $50,000 | $200,000 | $260,000 |
| Stop-loss reimburses | $210,000 | $60,000 | $0 |

In plain terms, the laser shifted $150,000 of this member's claims from the carrier to the company. A lower premium on a lasered renewal can be misleading if the employer does not budget for the laser. Lasers can be added at a new placement or at renewal, so review them before binding, and ask whether the carrier will agree to a "no new laser" provision or a renewal rate cap.

## Example 5: how does an aggregating specific deductible work?

An aggregating specific deductible (ASD) is a layer the plan pays above the specific deductible, pooled across all large claimants, before specific reimbursement begins. Employers accept one to lower the specific premium. In this example the specific deductible is $50,000 and the ASD is $75,000. Two members pass the specific deductible this year.

| Item | Member A | Member B | Total |
| --- | --- | --- | --- |
| Eligible claims | $150,000 | $90,000 | $240,000 |
| Plan pays up to the specific deductible | $50,000 | $50,000 | $100,000 |
| Claims above the specific deductible | $100,000 | $40,000 | $140,000 |
| Plan pays to fill the ASD | | | $75,000 |
| Stop-loss reimburses (without an ASD) | | | $140,000 |
| Stop-loss reimburses (with a $75,000 ASD) | | | $65,000 |

In plain terms, the ASD makes the company carry an extra $75,000 of large claims in the year, at most, before the carrier pays anything under specific stop-loss. In a year with no large claims, the ASD costs nothing and the company keeps the premium savings. In a year with several, the ASD is used up and the plan pays the full $75,000. Contracts differ on whether ASD claims count toward the aggregate attachment point, so check that wording.

## Mistakes to avoid when comparing policies.

The examples above show where the money moves. These are the points that most often change the result:

- **Comparing on price alone.** A cheaper quote may carry a laser, an ASD, a shorter run-out or exclusions that cost more than the premium saved.
- **Ignoring lasers.** One lasered member can shift six figures of risk back to the plan, as Example 4 shows.
- **Overlooking the contract basis.** A 12/12 contract without run-out can leave claims uncovered when the policy ends, as Example 3 shows.
- **Mismatched plan and policy wording.** Stop-loss reimburses only what the policy covers. If the plan document pays for something the policy excludes, the plan pays it alone.
- **Treating stop-loss as employee coverage.** Stop-loss insures the employer's plan, not employees. The Department of Labor notes that it generally is not treated as health insurance under state law.

Ethos Benefits reviews stop-loss quotes and contracts, including lasers, ASDs and contract basis, through its [stop-loss service](https://ethosbenefits.com/services/stop-loss).

## Who uses stop-loss?

Nearly every self-funded employer carries some stop-loss, and it matters most to groups with less room to absorb a bad year:

- **Small and mid-size employers,** where one large claim is a bigger share of the budget. Many start with [level funding](https://ethosbenefits.com/benefits-101/level-funded-vs-self-funded), which builds stop-loss into the monthly cost, as a step toward traditional self-funding.
- **Employers new to self-funding** that have not yet built claims reserves.
- **Groups with volatile claims history,** where expected claims are hard to predict.

For a fuller look at the trade-offs, see [self-funded health insurance](https://ethosbenefits.com/benefits-101/self-funded-health-insurance) and [what stop-loss insurance costs](https://ethosbenefits.com/benefits-101/stop-loss-insurance-cost).

## On the podcast

- [Stop-Loss, Risk Transfer and Your Highest-Cost Claimants: Brett Morris of the Samaritan Fund Program](https://ethosbenefits.com/podcast/stop-loss-risk-transfer-brett-morris), The Business of Benefits, Episode 85

## Frequently asked questions

### Can one employee's claims trigger both specific and aggregate stop-loss?

Yes, but not with the same dollars. Specific stop-loss reimburses the part of that person's claims above the specific deductible, and only the part up to the specific deductible counts toward the aggregate attachment point. The plan can receive both reimbursements in the same year if total claims also pass the aggregate attachment point.

### What happens to a claim incurred in December but paid in February?

It depends on the contract basis. Under a 12/12 contract, a claim incurred in the policy year but paid after it ends is not covered. A 12/15 contract adds three months of run-out, so a February payment counts, and a new policy written on a paid basis covers it by payment date. Check both contracts when changing carriers so the claim does not fall into a gap.

### What is an aggregating specific deductible?

An aggregating specific deductible is an extra layer of claims the plan pays above the specific deductible, counted across all large claimants, before specific stop-loss begins reimbursing. It lowers the specific premium in exchange for more risk kept by the plan.

### Is there a cap on stop-loss reimbursements?

Some policies set a maximum reimbursement per person or per policy year, and others are unlimited. The specific maximum and the maximum aggregate benefit are both stated in the policy, so check them alongside exclusions and any plan provisions the carrier will not reimburse, because the plan still owes those claims to members.

### What happens to stop-loss if an employer changes TPAs mid-year?

A mid-year TPA change can create gaps in claims history and eligibility data that the stop-loss carrier relies on. Confirm in writing that the policy recognizes claims paid by both TPAs and that each claimant's accumulated claims carry over. Ask the same of eligibility records, so no large claim restarts its count toward the specific deductible or the aggregate.

### How do employers model stop-loss risk before choosing deductibles?

Employers and their advisors usually start from two or three years of claims data, including large claimants, and price several specific deductibles side by side. The goal is to compare the premium saved at each level with the extra claims the plan would carry in a bad year.

## Sources

1. [Stop Loss Insurance Model Act (Model](https://content.naic.org/sites/default/files/model-law-092.pdf), National Association of Insurance Commissioners
2. [Technical Release 2014-01: Guidance on State Regulation of Stop-Loss Insurance](https://www.dol.gov/agencies/ebsa/employers-and-advisers/guidance/technical-releases/14-01), U.S. Department of Labor, Employee Benefits Security Administration
3. [29 U.S. Code § 1191b, Definitions (group health plan, health insurance coverage)](https://www.law.cornell.edu/uscode/text/29/1191b), Legal Information Institute, Cornell Law School