A self-funded plan pays claims out of its own money, not an insurer’s — that’s the entire point of self-funding, and it’s also the risk. A handful of catastrophic claims in a single year can blow past what the plan sponsor budgeted, sometimes by a large multiple. Stop-loss insurance is how a self-funded plan caps that exposure: it’s a policy the plan sponsor buys from a stop-loss carrier, and it reimburses the plan once claims cross a defined threshold, called the attachment point.
Specific vs. aggregate
Specific stop-loss caps exposure per member. The plan sets a specific attachment point — say $100,000 — and if one member’s claims for the year cross that number, the stop-loss carrier reimburses everything above it for that member. This is the policy that protects against the single catastrophic case: a premature birth with a long NICU stay, a cancer diagnosis, a major trauma.
Aggregate stop-loss caps exposure across the whole plan. It sets a threshold for total plan claims for the year — typically expressed as a percentage of expected claims, often 120–125% — and reimburses the plan for total claims above that number, regardless of whether any single member crossed the specific threshold. This protects against a bad year overall: not one catastrophic claim, but an unlucky spread of moderately expensive claims across many members.
Most self-funded plans carry both, because they cover different failure modes. Specific protects against one member wrecking the budget; aggregate protects against the whole plan running hot even if no single claim does.
A worked example
A plan with 500 members sets a specific attachment point of $75,000 per member and an aggregate attachment point at 125% of expected claims, with expected claims budgeted at $4 million for the year — putting the aggregate threshold at $5 million.
One member has a major surgery and complications totaling $220,000 in claims for the year. The plan pays the first $75,000 itself; the stop-loss carrier reimburses the remaining $145,000 under specific coverage. Total plan claims across all 500 members for the year come in at $5.3 million gross. Aggregate stop-loss accumulates net of amounts already reimbursed under specific — specific reimbursements don’t also count toward the aggregate attachment, or the plan would be paid twice on the same dollars. So the aggregate basis is the $5.3 million in gross claims minus the $145,000 already recovered under specific: $5.155 million. Against the $5 million aggregate attachment point, that leaves $155,000 the carrier reimburses under aggregate coverage. Without either policy, the plan sponsor is exposed to the full amount in both scenarios.
Why this matters operationally — and where Claimaro sits
Stop-loss is what makes self-funding viable for a mid-market employer or healthshare that can’t absorb unlimited claims risk directly; without it, the volatility of self-funding would be a non-starter for most groups. But stop-loss also isn’t automatic — it has to be placed with a carrier, priced against the plan’s expected claims and member risk profile, and renewed (or “lasered” — assigned a higher specific attachment point than the rest of the plan, or excluded from specific coverage entirely, for a named high-risk member) as claims experience develops.
Claimaro is claims administration software, not a stop-loss carrier or broker — it does not sell, place, or underwrite stop-loss policies. What it does is produce the claims data and financial reporting a stop-loss carrier needs to process reimbursements accurately: specific claims tracked against each member’s running total, aggregate claims tracked against the plan-year threshold, and the documentation a carrier requires to pay a reimbursement without a manual reconciliation. That reporting matters directly for a self-funded employer plan managing its own risk, and for a TPA administering stop-loss reporting across multiple client books — placement and the carrier relationship stay with your broker, but the claims data behind every reimbursement request comes out of the adjudication platform. Upstream of placement, modeling how different specific and aggregate attachment points change a plan’s exposure is a plan design exercise — run against the plan’s own claims experience rather than a quote sheet alone.