# How much does stop-loss insurance cost? What drives the premium, and how to lower it.

Source: https://ethosbenefits.com/benefits-101/stop-loss-insurance-cost
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: "How much does stop-loss insurance cost?," Ethos Benefits, https://ethosbenefits.com/benefits-101/stop-loss-insurance-cost, updated 2026-11-03.

**Short answer:** Stop-loss insurance cost depends on your group, so there is no standard price. Carriers quote specific stop-loss per employee per month by single and family tier, and aggregate coverage separately. The specific deductible, contract type, group size, claims history, lasers, industry, plan design, medical trend and commissions all move the premium.

If your company self-funds its health plan, or is thinking about it, stop-loss insurance is the coverage that reimburses the plan for very large claims. It is also one of the largest fixed costs in a self-funded budget. This guide explains what drives the stop-loss premium, how quotes are built, and what you can do to lower it. For how the coverage itself works, see [how stop-loss insurance works](https://ethosbenefits.com/benefits-101/stop-loss-insurance).

## How much does stop-loss insurance cost?

There is no published standard price for stop-loss insurance. Each quote is underwritten for one group, based on the coverage you choose and the risk the carrier sees in your population. Two employers with the same headcount can receive quotes that differ widely because of one large claimant, a different deductible or a different contract basis.

That is why you will see a wide spread of "average" per-employee prices online, and why those figures are of little use for budgeting. The more useful questions are which levers set your price and whether the quotes you are comparing are built the same way.

A stop-loss premium usually has two parts:

- **Specific stop-loss** reimburses claims for any one person above the specific deductible. This is usually the larger share of the premium.
- **Aggregate stop-loss** reimburses total plan claims above the aggregate attachment point. It is priced separately and is often a much smaller line item. See [aggregate stop-loss](https://ethosbenefits.com/benefits-101/aggregate-stop-loss) for how that attachment point is set.

## How is stop-loss quoted?

Carriers quote stop-loss as a rate **per employee per month (PEPM)**, applied to the number of enrolled employees in each coverage tier.

| Quote element | How it is usually expressed |
| --- | --- |
| Specific premium | A monthly rate per enrolled employee, by tier (single, family, or more tiers such as employee plus spouse) |
| Aggregate premium | A monthly rate per enrolled employee, often a single composite rate |
| Aggregate attachment factors | Monthly amounts per enrolled employee, by tier, that add up to the aggregate attachment point |
| Specific deductible | A dollar amount per covered person per policy year |
| Contract basis | Incurred and paid months, such as 12/12, 12/15, 24/12 or paid |
| Lasers | Any person with a higher deductible or an exclusion, listed by amount |

Your monthly premium moves with enrollment. If more employees elect family coverage, the specific premium rises even if the rates do not change.

### An illustrative calculation

The numbers below are **made-up round numbers for illustration only**. They are not a market price or a quote, and real rates for your group may be far higher or lower.

Assume a group with 100 enrolled employees: 60 in single coverage and 40 in family coverage.

| Line | Enrolled | Example monthly rate | Monthly cost |
| --- | --- | --- | --- |
| Specific, single | 60 | $100 | $6,000 |
| Specific, family | 40 | $250 | $10,000 |
| Aggregate, all tiers | 100 | $5 | $500 |
| **Total** | | | **$16,500** |

In this example the annual stop-loss premium is $16,500 times 12, or $198,000. If ten employees moved from single to family coverage, the specific premium would rise by 10 times $150, or $1,500 a month, with no change in rates.

## What drives the stop-loss premium?

These are the main factors carriers weigh when they price a stop-loss policy.

| Factor | Effect on price |
| --- | --- |
| Specific deductible level | Higher deductible, lower premium, more risk kept by the plan |
| Contract type | Longer run-in or run-out costs more |
| Group size and demographics | Smaller and older groups usually cost more per employee |
| Claims history and disclosed large claimants | Known high-cost cases raise the price or lead to lasers |
| Lasering | Lowers the premium by moving one person's risk back to the plan |
| Industry | Some industries are priced with higher expected claims |
| Network and plan design | Richer benefits and weaker discounts raise expected claims |
| Medical trend | Carriers project claims costs forward each year |
| Carrier appetite | Market conditions change what carriers will offer |
| Commissions | Often built into the premium |

### Specific deductible level

The specific deductible is the single biggest lever. Raising it lowers the premium because the plan pays more of each large claim before the carrier steps in. The trade-off is cash flow: your plan has to be able to absorb several claims up to that level in the same year. Some states also set minimum attachment points. The NAIC Stop Loss Insurance Model Act bars specific attachment points below $20,000, and states that adopt it may change that amount.

### Contract type

The contract basis decides which claims count. A 12/12 contract covers claims incurred and paid within the policy year, while a 12/15 adds a three-month run-out and a 24/12 adds a 12-month run-in. Broader coverage costs more. A first-year 12/12 quote can look cheaper than a 12/15 quote while leaving claims paid after the year ends uncovered, so compare quotes on the same basis.

### Group size and demographics

Larger groups spread risk across more people, so one large claim has less effect on the whole plan and the per-employee rate is usually lower. Age, gender mix and the share of employees covering family members also shape expected claims.

### Claims history and disclosed large claimants

Carriers ask for recent claims experience and for a disclosure of known large claimants, such as members in active cancer treatment, on dialysis or expecting a high-risk birth. A group with high recent claims or several known large cases will see higher rates, lasers or both. Disclose fully and keep the disclosure current up to the effective date. A large claimant left off the disclosure can give the carrier grounds to deny reimbursement under the policy's terms.

### Lasering

Lasering sets a higher specific deductible for one person with known high costs, or excludes that person. A laser lowers the premium, but only because your plan keeps that person's risk. Price the laser as part of the cost: a lower premium with a $250,000 laser may cost more in a bad year than a higher premium with none.

### Industry

Carriers use industry as a rating factor because claims patterns differ. Physically demanding work, such as construction or manufacturing, is often rated differently from office-based work.

### Network and plan design

The carrier prices the claims your plan is expected to pay. Richer benefits, out-of-network coverage, and the strength of the network discounts all change that expectation. Cost-containment programs, such as [reference-based pricing](https://ethosbenefits.com/benefits-101/reference-based-pricing), can change pricing too, and some carriers ask detailed questions about them before quoting.

### Medical trend

Stop-loss is priced for the coming policy year, so carriers apply an expected rate of growth in claims costs, called trend. Large claims tend to grow faster than routine ones, because specialty drugs, cancer care and neonatal care drive many of them. CMS publishes national health spending projections each year, which give context for the direction of costs, but each carrier sets its own trend assumptions.

### Carrier appetite

The stop-loss market changes. Some years carriers compete hard for new business, and other years they raise rates or tighten underwriting after heavy losses. The same group can see different pricing from year to year for reasons outside its own claims.

### Commissions included in the premium

When a broker is paid by commission, the commission is commonly built into the stop-loss premium the carrier quotes, often as a percentage of premium. That means it grows as the premium grows. ERISA section 408(b)(2)(B) requires brokers and consultants that serve group health plans to disclose in writing the direct and indirect compensation they expect to receive, and the law names stop-loss insurance among the covered services. Ask for that disclosure and for quotes that show how much of the premium is commission.

## How can you lower stop-loss cost?

Most ways to lower the premium either shift risk back to your plan or improve the risk the carrier sees. Know which one you are doing.

1. **Test higher deductibles.** Ask for quotes at several specific deductible levels and compare the premium saved with the extra claims your plan could pay in a bad year.
2. **Market the policy.** Quotes from several carriers, built on the same contract basis and deductible, show you where the market is. Clean, complete claims data and large-claimant reports get firmer quotes.
3. **Review lasers before you bind.** Negotiate to remove or reduce lasers, or ask for a no-new-laser provision and a renewal rate cap at the first renewal.
4. **Check the contract basis.** Make sure the run-in and run-out match your situation, especially when changing carriers, so you are not paying for coverage you do not need or missing claims you do.
5. **Manage the claims that drive the price.** Care management for high-cost conditions, specialty drug management and cost-containment programs can lower large claims over time, which carriers see at renewal.
6. **Know what is in the premium.** Ask for compensation disclosures and compare commission-inclusive and net quotes.

Smaller employers that want predictable monthly costs sometimes look at [level-funded plans](https://ethosbenefits.com/benefits-101/level-funded-health-insurance), which bundle stop-loss with administration and expected claims funding. That changes how the cost is packaged, not the factors that drive it.

Ethos Benefits reviews, markets and audits stop-loss contracts through its [stop-loss service](https://ethosbenefits.com/services/stop-loss).

## Is a higher premium ever worth it?

Sometimes. A broader contract, such as a 12/15 instead of a 12/12, or a lower deductible costs more each month but reduces how much a bad year can cost. If your company has limited cash reserves or cannot absorb several large claims in one year, paying more for stability can be the right choice. If your reserves are strong and your group is large, keeping more risk at a higher deductible may cost less over several years. For worked scenarios of how claims flow through a policy, see [stop-loss examples](https://ethosbenefits.com/benefits-101/stop-loss-examples).

## From the Ethos Benefits team

> When you have that data, you're able to see, okay, is this high-cost claimant an ongoing risk, or is this something that's really not going to be an issue next year? … Without knowing that, you can't properly underwrite for it, so you can't make a really good decision on it.

Patrick Ansara, Partner and Director of Client Operations, Ethos Benefits, on [The Business of Benefits, Episode 89](https://ethosbenefits.com/podcast/benefits-dirty-dozen-part-2)

## 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

### What is a stop-loss premium?

A stop-loss premium is what the employer pays the stop-loss carrier for coverage that reimburses large claims. It is usually quoted as a monthly rate per enrolled employee, with specific coverage priced by tier, such as single and family, and aggregate coverage priced separately. The premium is a fixed cost of self-funding, paid whether or not the plan has a large claim.

### What is the average cost of stop-loss insurance per employee?

There is no reliable public average, because premiums depend on the deductible, contract type, group size, claims history and carrier. Two groups of the same size can receive very different quotes, so compare quotes on the same deductible and contract basis rather than against an industry number.

### Does raising the specific deductible lower the stop-loss premium?

Yes. A higher specific deductible lowers the premium because the plan pays more of each large claim before the carrier steps in. The trade-off is risk and cash flow, since the plan must be able to absorb several claims up to that level in the same year. Some states set minimum attachment points that limit how low the deductible can go.

### Why did my stop-loss renewal go up?

Renewals usually rise because of large claims in the past year, new lasers on high-cost members, medical trend or a tighter stop-loss market. Rates are set for a 12-month policy and reviewed at each renewal. Some employers negotiate a renewal rate cap or a no-new-laser provision before binding the policy to limit the size of the next change.

### Can stop-loss premiums be negotiated?

Yes. Marketing the policy to several carriers, adjusting the deductible or contract basis, and providing complete, current claims data all affect what carriers offer. Larger groups usually have more room to negotiate terms. Terms such as lasers, renewal rate caps and run-out can matter as much as the rate, so negotiate those too.

### Are broker commissions included in the stop-loss premium?

Often, yes. When a broker is paid by commission, it is commonly built into the quoted premium, and ERISA requires brokers and consultants to group health plans to disclose in writing the compensation they expect to receive, including for stop-loss.

## 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 § 1108, Exemptions from prohibited transactions (ERISA section 408(b)(2)(B) service provider disclosure)](https://www.law.cornell.edu/uscode/text/29/1108), Legal Information Institute, Cornell Law School
4. [National Health Expenditure Data, Projected](https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data/projected), Centers for Medicare & Medicaid Services