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Aggregate Stop-Loss is used to limit the employers' overall annual cost for a self funded plan. This coverage addresses the accumulation of expenses on all individuals covered by the plan.

Any health benefit plan can be included under the aggregate stop-loss, including medical, dental, vision, stand-alone prescription programs, even short term disability coverage. Except for medical planning, most employers under 100 lives utilize fully-funded plans for ancillary coverages.

Stop-loss is not suitable for life insurance, long term disability, accidental death & dismemberment or other high loss insurance products due to the unpredictability and infrequency of claims. Short-term disability is often employer financed with the adoption of a qualified sick pay plan. The long term financial effects of this planning make self funding for short term disability problematic for small employers.

Specific Stop-Loss must be purchased along with Aggregate Stop-Loss to provide protection for the aggregate limit, for maximum protection. When eligible expenses paid during a contract period exceed the Annual Aggregate Deductible, the group is reimbursed as specified in the contract after the close of the contract period.

The group is expected to fund the normal expected claims plus an additional amount, called margin. These two elements are often combined with the Annual Aggregate Deductible. The monthly Aggregate Deductible is calculated by multiplying each month's number of covered employees and covered dependents by the appropriate monthly deductible factors. The sum of the twelve monthly deductible amounts is the Annual Aggregate Deductible.

Generally, the minimum Annual Aggregate Deductible is the greater of 95% of the first monthly Aggregate Deductible x 12, OR the fixed dollar amount set by the underwriter. [back] [next]