--- title: "Stop Loss 101: Protecting Your Self-Funded Plan" description: Self-funding is a cost-effective alternative to a fully insured plan but can come with the higher risk of funding costly medical and drug claims. To mitigate that risk, employers purchase stop loss insurance. image: https://blog.90degreebenefits.com/hubfs/Imported_Blog_Media/protect-self-funded-1.webp --- [![Company Logo](https://90degreebenefits.com/wp-content/uploads/2025/01/logo-90db.svg)](https://90degreebenefits.com/) - [News 90](https://blog.90degreebenefits.com/#news-90) - [Administrator](https://blog.90degreebenefits.com/#admin) - ![](https://blog.90degreebenefits.com/hs-fs/hubfs/Imported_Blog_Media/protect-self-funded-1.webp?width=700&height=434&name=protect-self-funded-1.webp) # Stop Loss 101: Protecting Your Self-Funded Plan Providing employees with health insurance coverage is a major expense for businesses, second only to payroll. Self-funding is a cost-effective alternative to a fully insured plan but can come with the higher risk of funding costly medical and drug claims. To mitigate that risk, employers purchase stop loss insurance. So, what is stop loss? And how does it work to protect self-funded health plans? Let’s get into the details.   ## **Understanding Stop Loss Insurance** Self-funded plans provide flexibility to create more customized plans, insights into plan performance, and a higher potential for year-over-year savings. But individual catastrophic claims and overall high spending during a policy year can still happen. Stop loss insurance protects self-funded employers from excessive claim costs. It consists of two key components: specific and aggregate coverage.   ### **Specific Stop Loss Coverage** Specific stop loss applies to individual claimants. For example, if an employer selects a $50,000 specific deductible, they are responsible for an individual’s claims up to that amount. Any costs exceeding $50,000 are filed for reimbursement by the TPA to the stop loss carrier. Employers pay a monthly premium for specific stop loss coverage.   ### **Aggregate Stop Loss Coverage** Aggregate stop loss covers the entire employee population. The carrier sets an expected claims amount based on historical claims data and adds a margin (typically 10-50%). If total claims during the policy year exceed this threshold, the TPA files for reimbursement from the stop loss carrier. Employers pay a monthly aggregate premium for aggregate stop loss coverage.   ### **Selecting the Right Stop Loss Contract** Employers must choose a contract that determines how claims are covered over time. Common options include: - **12/12** – Covers claims incurred and paid within the same 12-month policy period. - **24/12** – Covers claims incurred in the prior year and paid in the policy year. - **12/15** – Covers claims incurred in the policy year and paid within three additional months. - **15/12** – Covers claims incurred three months before the policy year and paid within the policy year. For example, a 24/12 contract starting on 1/1/2025 covers claims incurred from 1/1/2025 – 12/31/2026 and paid from 1/1/2025 – 12/31/2025.   ## **Key Stop Loss Considerations and Features** ### **Lasers** Stop loss carriers may assign higher deductibles to high-risk individuals. For instance, an employee with expected claims of $100,000 may receive a laser deductible of $100,000 instead of the standard $50,000 assigned to everyone else on the plan.   ### **No New Laser/Rate Cap Feature** This optional protection prevents new lasers from being assigned and limits renewal rate increases (typically capped at 50%) for an additional percentage added to premium costs.   ### **Aggregating Specific** This option increases employer liability in exchange for lower premiums. For example, with a $50,000 specific deductible and a $30,000 aggregating specific, the employer must cover an additional $30,000 before stop loss reimbursement begins, but their annual premium is typically reduced by the same amount.   ## **Why Work with 90 Degree Benefits?** Navigating stop loss coverage is complex, but 90 Degree Benefits simplifies the process with expert guidance and tailored solutions. As a national TPA, 90 Degree Benefits helps employers optimize self-funded plans while ensuring financial protection. Make the right turn™ with 90 Degree Benefits. Our team is ready to help you build a self-funded plan with the right stop loss coverage to protect your clients and members. --- [← Level-Funding vs. Self-Funding](https://blog.90degreebenefits.com/level-funding-vs-self-funding) [The Healthcare Holy Grail: Achieving the Perfect Balance of Cost, Quality, and Access →](https://blog.90degreebenefits.com/the-healthcare-holy-grail-achieving-the-perfect-balance-of-cost-quality-and-access) [![90 Degree Benefits - A Turn for the Better](https://90degreebenefits.com/wp-content/uploads/2025/01/logo-90db.svg)](https://blog.90degreebenefits.com/) - [(833).RGT.TURN](tel:+18337488876) | [(833) 748.8876](tel:+18337488876) - [Contact Us](https://90degreebenefits.com/contact/) - [Legal](https://90degreebenefits.com/legal/) - [Privacy Statement](https://90degreebenefits.com/legal/#privacy-statement) - [Careers](https://90degreebenefits.com/careers/) - [Connect on LinkedIn](https://www.linkedin.com/company/90-degree-benefits)[Connect on YouTube](https://www.youtube.com/@90DegreeBenefits) ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Drew Jenkins", "url" : "https://blog.90degreebenefits.com/author/drew-jenkins" }, "dateModified" : "2026-01-30T15:05:18.568Z", "datePublished" : "2025-01-27T17:26:06.000Z", "headline" : "Stop Loss 101: Protecting Your Self-Funded Plan", "image" : [ "https://blog.90degreebenefits.com/hubfs/Imported_Blog_Media/protect-self-funded-1.webp" ], "mainEntityOfPage" : { "@id" : "https://blog.90degreebenefits.com/understanding-stop-loss-coverage", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://blog.90degreebenefits.com/hubfs/9DB_Logo_RGB-1.png" }, "name" : "90 Degree Benefits" } } ```