Which type of client might choose spec-only stop loss coverage?

Which type of client might choose spec-only stop loss coverage?

• A. Large clients with over 2,500 lives.
• B. Small groups with under 100 lives.
• C. Medium groups with 1,000-2,000 lives.
• D. Employers with self-funded plans.

Answer: (A)

Spec-only stop loss is purchase to limit exposure to a single high-cost claim in a self-funded plan. This is most attractive to very large employers because, with thousands of lives, the chance of an extreme individual claim increases, and having a specific stop-loss limit helps cap that worst-case cost without paying for broad, annual protection. Smaller groups have less potential for a catastrophically expensive claim and often either rely on lighter coverage or don’t self-fund, making spec-only less justifiable. So, the largest employers—those with tens of thousands of employees or more—are the type that typically choose spec-only stop loss to manage risk efficiently.

Spec-only stop loss is purchase to limit exposure to a single high-cost claim in a self-funded plan. This is most attractive to very large employers because, with thousands of lives, the chance of an extreme individual claim increases, and having a specific stop-loss limit helps cap that worst-case cost without paying for broad, annual protection. Smaller groups have less potential for a catastrophically expensive claim and often either rely on lighter coverage or don’t self-fund, making spec-only less justifiable. So, the largest employers—those with tens of thousands of employees or more—are the type that typically choose spec-only stop loss to manage risk efficiently.