Medical stop-loss insurance

Medical stop-loss protects a US employer that self-funds its employees' health coverage against claims above what it chose to retain. The self-funded plan falls under the federal ERISA statute of 1974, which preempts most state insurance law. The stop-loss policy itself is an insurance contract with the employer, and states regulate it. The contract has two layers. Specific stop-loss attaches per person above an annual deductible, somewhere around 50,000 to 500,000 dollars depending on group size. Aggregate stop-loss attaches on the annual total, above an attachment point set as a percentage of expected claims, often 125%. The NAIC model act (Model 92) bars an individual attachment below 20,000 dollars, so that sham self-funding cannot sidestep health insurance rules. The risk changed with the Affordable Care Act, which removed lifetime caps in 2010 and annual caps in 2014 on essential health benefits. Gene therapies priced above 2 million dollars per patient did the rest. A single newborn can burn through the specific deductible of fifty employees. The underwriter looks at the contract basis (12/12, 12/15, paid 12/24), known diagnoses, and lasering, which sets a higher deductible for a member whose treatment is already underway. Not to be confused with stop-loss reinsurance, which protects an insurer on its annual loss ratio.