---
title: Stop-Loss Insurance Terminology Guide | Evolution Risk Partners
description: Explore ERP's glossary of stop-loss insurance terms. Get clear definitions of key industry terms to navigate stop-loss insurance with confidence.
---

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# Glossary of Stop-Loss Insurance Terms

Understanding the language of stop-loss insurance is key to making informed decisions. Explore this glossary for clear explanations of the terms and concepts that matter most to brokers and employers.

## General Key Terms

## Laser:

A laser is when the stop-loss insurance carrier identifies a specific individual within a group who is expected to have high medical costs (often due to a known serious medical condition). For this individual, the insurance carrier sets a higher specific deductible than for the rest of the group.

*When ERP offers “no new lasers at renewal,” it ensures stability in coverage by not introducing higher deductibles for specific individuals upon policy renewal, even if they develop high-cost conditions.*

## Stop-Loss Insurance:

Stop-loss insurance protects self-funded employers from catastrophic medical claims by reimbursing costs that exceed a predefined limit.

*For instance, if an employee incurs $500,000 in medical costs and the company’s stop-loss deductible is $100,000, stop-loss insurance reimburses $400,000.*

## Aggregate Stop-Loss:

 A policy that caps total claims costs for an entire group and reimburses if the total claims exceed a set threshold.

## Specific Stop-Loss:

 A policy that protects against high claims from a single individual by setting a specific deductible for each covered person.

## Distribution:

The sales and marketing activities involved in offering and selling stop-loss products to clients, such as employers or third-party administrators.

*This includes responding to RFPs, building broker relationships, and educating clients on stop-loss options.*

## Reference-Based Pricing (RBP):

A healthcare cost containment strategy where employers pay for medical services based on a fixed percentage above Medicare reimbursement rates or another benchmark.

*This helps reduce overall healthcare costs compared to traditional pricing models.*

## PPO (Preferred Provider Organization):

 A health plan where coverage is provided through a network of preferred doctors and hospitals at discounted rates.

## Third-Party Administrator (TPA):

 Organizations that handle administrative tasks for self-funded health plans, such as claims processing, billing, and customer service.

## Shared Risk/Reward:

 A health plan where coverage is provided through a network of preferred doctors and hospitals at discounted rates.

## PPO (Preferred Provider Organization):

 A health plan where coverage is provided through a network of preferred doctors and hospitals at discounted rates.

## Alternative Stop-Loss Arrangements

## Captives:

A form of self-insurance in which a group of companies creates their own insurance entity to provide coverage for their collective risks.

*ERP offers tailored captive programs to meet specific organizational, geographic, or industry needs.*

## Pooled Stop-Loss Programs:

Arrangements where multiple employers combine their stop-loss coverage into a single pool.

*This helps spread risk and stabilize premiums without creating a separate insurance entity.*

## Level-Funded Products:

A type of self-funded health plan where employers pay a set monthly amount that includes expected claims costs, stop-loss premiums, and administrative fees.

*If claims are lower than expected, the employer may receive a refund.*

 

## Transitional Stop-Loss Programs:

 Products designed to help employers transition from fully insured plans to self-funded arrangements, often including safeguards against unexpectedly high claims.

## Contract Features and Administration

## Advanced Funding:

 A stop-loss feature that provides upfront reimbursement for large claims, ensuring employers have immediate funds to cover high-cost expenses.

## Gapless Renewals:

 A provision ensuring seamless coverage during policy transitions, avoiding gaps in protection.

## Terminal Liability Option (TLO):

 An optional provision extending coverage for claims incurred during the policy period but filed after it ends.

## Run-In Contract:

 A stop-loss policy that covers claims incurred before the policy start date but paid afterward, ensuring protection during transitions.

## Run-Out Contract:

 A policy feature covering claims incurred during the policy period but paid after the policy ends, protecting against late-arriving claims.

## Waiver of Actively-at-Work:

A provision maintaining coverage for employees not actively working due to disability, leave, or similar reasons.

*This is especially important during transitions between carriers.*

## Plan Mirroring:

A feature where the stop-loss policy matches the terms of the employer’s self-funded health plan.

*For example, if the health plan covers 80% of hospitalization costs, the stop-loss policy reimburses based on the same terms.*

## Contract Features and Administration

## MGU (Managing General Underwriter):

 A specialized intermediary granted underwriting authority by an insurer. MGUs perform many functions of insurance carriers but do not bear the financial risk of claims.

## Underwriting:

The process of assessing risk and determining appropriate premiums.

*For stop-loss insurance, this includes analyzing claims history, evaluating demographics, and tailoring coverage options.*

## Your Stop-Loss Insurance Questions, Answered

Still have questions? Visit our FAQ Page or contact our team to see how these terms apply to your stop-loss needs.

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