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Is self-funding an
appropriate choice?

Self-funding vs.

Claim utilization

Risk management

As an employer, you should safeguard against a catastrophic claim by accessing a third party administrator and by purchasing stop-loss insurance coverage. Stop-loss coverage enables you to gain the advantages of self-funding while providing protection in the years of high claims expense. This protection is available in two forms:


Specific stop-loss limits your liability for claim expenses per each covered individual at a predetermined amount. The specific limit is determined prior to the start of the contract year and is based on the size of your employer group and risk retention ability. When a claim reaches the specific limit, you continue to pay the claim; however, the stop-loss carrier will begin to reimburse you for the amounts above the specific limit.

Aggregate stop-loss limits your overall liability for the entire group. Aggregate factors are developed which determine the aggregate attachment point. The attachment point is set at 120 percent—125 percent above the estimated paid claims. You are expected to fund the claims up to the attachment point. When the claims reach the aggregate attachment point, as with the specific coverage, you continue to pay the claim; however, the stop-loss carrier will reimburse you.