A stop-loss attachment point is the dollar threshold at which your stop-loss carrier starts reimbursing your self-funded health plan for claims. Every stop-loss policy carries two of them: a specific attachment point that caps your exposure on any single covered person, and an aggregate attachment point that caps total claims for the whole group over the policy year. Setting them is the central underwriting decision in a self-funded arrangement, because they determine how much claims risk you keep and how much you transfer to the carrier.
The Specific Attachment Point
The specific attachment point is a per-person ceiling. If any one covered individual’s claims cross that number during the policy year, the carrier reimburses you for everything above it. You absorb everything below.
Where the threshold lands tracks closely with group size. Employers with fewer than 50 covered lives commonly see specific attachment points at $50,000 or below. Groups of 50 to 150 lives typically sit between $50,000 and $100,000. Larger groups above 150 lives often set theirs above $150,000. The market floor is around $15,000; the ceiling can run to $1,000,000 or more.1U.S. Department of Labor. Unified Group Services Response to Departments Request for Information
The arithmetic is simple. An employee needs a heart transplant that costs $250,000, and your specific attachment point is $100,000. You pay the first $100,000; the carrier reimburses the remaining $150,000. This is the protection that catches organ transplants, premature births, and advanced cancer care — the low-frequency, high-cost cases that can individually drain a plan’s reserves.
Lasering: When One Person Gets a Different Threshold
Not every covered person is held to the same specific attachment point. If the carrier identifies someone with an ongoing condition expected to generate large claims, it can assign that person a higher threshold than the rest of the group. The industry calls this “lasering.”
Carriers laser based on diagnosis, prognosis, and the treatment already underway. If the group’s standard specific attachment point is $100,000 and one member is in cancer treatment projected to cost $500,000, the carrier may laser that individual at $500,000.2QBE. Demystifying Medical Stop Loss Lasers Everyone else stays at the group threshold. The reasoning is that stop-loss exists to transfer unpredictable risk, not known costs; a claim the carrier can already forecast is one the employer is expected to retain.
Lasers surface at renewal. A clean year may leave standard thresholds steady, but a newly diagnosed high-cost member can produce a laser that materially increases what you keep. When comparing carrier proposals, read the laser schedule carefully. Two quotes with the same headline attachment point can carry very different retained risk once the lasers are counted.
The Aggregate Attachment Point
The specific threshold handles individual catastrophes. The aggregate threshold catches a different scenario: no single person blows through the specific attachment point, but a rough flu season, a cluster of surgeries, or generally higher utilization pushes total group spending well past projection.
Carriers calculate the aggregate threshold by starting with expected claims and multiplying by a corridor factor. That factor typically runs 110% to 150% of expected claims depending on group size and risk profile. The NAIC Stop Loss Insurance Model Act sets minimums: for groups of 50 or fewer, the aggregate attachment point can’t fall below 120% of expected claims; for groups of 51 or more, the floor is 110%.3National Association of Insurance Commissioners. Stop Loss Insurance Model Act Most carriers land near 125% for mid-sized groups. An employer with $1,000,000 in expected annual claims would see an aggregate attachment point around $1,250,000.
How the Number Moves Month to Month
The aggregate isn’t a fixed figure stamped at the start of the year. The carrier assigns a per-employee-per-month factor derived from the group’s claims history and multiplies it by actual enrollment each month. Flat enrollment produces an annual deductible that’s simply the twelve monthly figures added up. Aggressive midyear hiring pushes the aggregate threshold higher as the group grows.
Aggregate Accommodation
Under a standard aggregate policy, you pay all claims as they come in and only get reimbursed after the annual aggregate threshold is exceeded, usually settled after the policy year closes. For smaller employers that lag can strain cash flow. An aggregate accommodation provision changes the timing: whenever year-to-date claims exceed the year-to-date portion of the aggregate threshold in any given month, the carrier reimburses the overage that month. If claims dip back below the running threshold the following month, you repay the carrier.4Society of Actuaries. Employer Stop Loss Insurance Considerations
Regulatory Floors on Attachment Points
Regulators worry that very low attachment points turn a nominally self-funded plan into something functionally identical to fully insured coverage, but without the state consumer protections that come with it. A 20-person company buying stop-loss at a $5,000 specific threshold is transferring almost all claims risk to the carrier, which looks a lot like a traditional group policy routed around state mandates.
The NAIC Stop Loss Insurance Model Act sets floors to address this. Under the model, no stop-loss policy may be issued with a specific attachment point below $20,000 per individual. For aggregate coverage on groups of 50 or fewer, the minimum is the greater of $4,000 per group member, 120% of expected claims, or $20,000. For groups above 50, the aggregate floor is 110% of expected claims.3National Association of Insurance Commissioners. Stop Loss Insurance Model Act
Individual states set their own numbers and they vary. Some follow the NAIC model closely; others set specific minimums as low as $10,000 or as high as $40,000. Many states apply minimums only to the small-group market (fewer than 50 or 100 employees) and leave larger groups unregulated.5National Association of Insurance Commissioners. Stop Loss Coverage State Chart The Department of Labor has endorsed state authority here, treating regulation of the insurance product as separate from regulation of the ERISA plan itself.
How Carriers Set Your Attachment Point
Pricing an attachment point is underwriting, not a formula. The carrier is trying to estimate what your group’s claims will look like over the coming year, and it draws on several inputs.
It starts with an employee census: age, gender, geographic location, and dependent counts, since those drive utilization. On top of that goes two to three years of historical claims data, usually pulled from the third-party administrator or outgoing carrier. Underwriters look for trends. Is spending accelerating? Are there recurring high-cost diagnoses? Have large claims been one-offs or part of a pattern?
Plan design feeds in too. A rich plan with low deductibles and broad network access generates more claims than a high-deductible plan, so underwriters pull the summary plan description to calibrate. Reports on large claims already in progress get special attention, because they affect both the specific threshold and whether anyone will be lasered.
Disclosure matters as much as data. Carriers evaluate risk using claims experience or individual health questionnaires, and the accuracy of what you submit directly shapes the attachment points and premiums you’re offered.6U.S. Department of Labor. Public Comment on Stop Loss Insurance A questionnaire that omits known conditions can lead the carrier to decline coverage altogether. This is one place self-funded plans diverge sharply from the fully insured market: the ACA prohibits medical underwriting in fully insured group plans, but stop-loss carriers can and routinely do underwrite medically.
Contract Basis: When a Claim Falls Inside Your Attachment Point
An attachment point only matters for claims the policy actually covers, and the contract basis decides which claims qualify. Picking the wrong structure can leave you holding the bill for claims that fell in a gap between policy years. Self-funded plans trip over this more than almost anywhere else.
Incurred Contracts
An incurred contract (often called a 12/15) covers claims incurred during the 12-month policy period, meaning the service was provided in that window, even if the bill isn’t paid until up to three months after the policy year closes. That three-month tail is the run-out period. Some contracts extend it to six or twelve months. This structure works well when you’re renewing with the same carrier, because the date of service controls and there’s no dispute about which year a claim belongs to.
Paid Contracts
A paid contract (often called a 24/12) covers claims paid during the 12-month policy period regardless of when the service was provided, as long as it occurred on or after the original effective date of coverage. The run-in provision protects you from claims incurred before the stop-loss policy started but paid afterward. This structure is common when you’re switching carriers, since the new carrier picks up old claims that come in for payment during its term.
Terminal Liability
If you cancel stop-loss, often because you’re moving to a fully insured plan, claims incurred near the end of the policy year may not be paid before the policy terminates. Terminal liability coverage extends the specific and aggregate contract period by three or six months to pick up those trailing claims.7Blue Cross Blue Shield of Massachusetts. Stop-Loss Coverage Option – Terminal Liability You typically have to elect this at the start of the contract year and pay for it throughout the term. It can’t be added retroactively when you decide to leave.
Picking the Right Level
Every attachment point choice is a bet on risk tolerance versus premium. Lower attachment points buy more protection and cost more, because the carrier is taking on a larger share of claims risk. Higher attachment points hold premium down and leave you exposed to a wider band of losses before coverage kicks in.
Stop-loss premiums for a typical self-funded plan run about 10% to 15% of total plan costs, with claims making up the bulk and administrative fees accounting for another 3% to 5%.8U.S. Department of Labor. Public Comment on Stop Loss Insurance An employer that drops its specific attachment point from $150,000 to $75,000 will see a meaningful premium increase, but it also cuts worst-case per-person exposure in half. The right balance depends on your reserves, your appetite for volatility, and how much claims swing your finance team can absorb in a given year.
Level-funded arrangements package this tradeoff for smaller employers who want cost predictability. In a level-funded plan, you make a fixed monthly payment that covers projected claims, administrative fees, and stop-loss premiums, with a possible refund if actual claims come in under the claims allowance. These plans are technically self-funded and include stop-loss protection, but they feel more like traditional insurance from a budgeting standpoint. They aren’t available everywhere; some states restrict them through stop-loss coverage regulations.
Watch the Gap Between Your Plan and Your Stop-Loss Policy
Stop-loss insurance is not a group health plan. It insures your financial exposure as the employer, not the participants’ access to care. That distinction means stop-loss carriers aren’t required to meet many ACA mandates that bind fully insured plans. A stop-loss policy can include annual benefit limits per covered individual, define experimental treatments on its own terms, and exclude certain clinical trial costs, even where the underlying self-funded plan can’t impose those restrictions on participants.9National Association of Insurance Commissioners. Stop Loss Insurance, Self-Funding and the ACA If the stop-loss policy excludes a claim the plan is obligated to pay, you pay it entirely out of pocket. Line up the exclusions in your stop-loss contract against the coverage obligations in your plan document before signing. Any mismatch is retained risk that your attachment point was never designed to catch.