Stop loss insurance is the financial protection layer that makes self-funded group health plans viable for Texas small and mid-size businesses. Without it, a single employee's cancer diagnosis, premature birth, or organ transplant could produce a claim exceeding $500,000 - a cost that falls entirely on the employer under a self-funded structure. Stop loss coverage caps that exposure.
One important clarification upfront: stop loss insurance for employers is a different product from catastrophic health insurance for individuals. This guide covers the employer-side product - the coverage that protects a self-funded group health plan. If you're looking for individual catastrophic health coverage, our employer stop loss plans and related resources address both contexts.
For 2026, Texas employers with self-funded health plans typically pay $20 - $55 per enrolled employee per month for stop loss coverage, depending on group size, employee demographics, specific attachment point selection, and claims history. That range represents the stop loss premium alone, separate from the claims funding and administration components of the plan.
Texas employers with self-funded health plans typically pay $20 - $55 per enrolled employee per month for stop loss coverage in 2026.
Wilkerson Insurance AgencyWhat Is Stop Loss Insurance and Why Does It Matter?
When a Texas business moves from a fully-insured group health plan, where the carrier assumes all claims risk, to a self-funded or level-funded plan, the employer takes on direct financial responsibility for employee health claims. Stop loss insurance protects the employer against two specific risks:
The Two Layers of Stop Loss Protection
- Specific stop loss, also called individual stop loss: Covers claims from a single employee that exceed a defined dollar threshold - the specific attachment point - in a plan year. If an employee's cancer treatment generates $450,000 in claims and the specific attachment point is $75,000, the stop loss carrier reimburses the employer $375,000.
- Aggregate stop loss: Covers the employer when total claims from all plan participants combined exceed a defined threshold for the plan year - typically set at 120 - 125% of expected total claims. This protects against the scenario where multiple employees have moderately high, but individually sub-threshold, claims that collectively exceed the employer's funding capacity.
Most self-funded Texas employers purchase both layers. Specific stop loss alone protects against catastrophic individual claims but leaves you exposed to a bad-claims year across the group. Aggregate stop loss alone protects against a poor collective year but doesn't cap per-individual liability. Together, they provide comprehensive financial protection.
2026 Stop Loss Insurance Cost Ranges for Texas Businesses
| Group Size | Specific Attachment Point | Est. Specific Stop Loss Cost/Employee/Mo | Aggregate Cost/Employee/Mo |
|---|---|---|---|
| 5 - 25 employees | $25,000 - $50,000 | $30 - $55 | $5 - $12 |
| 25 - 50 employees | $40,000 - $100,000 | $20 - $40 | $4 - $10 |
| 50 - 100 employees | $75,000 - $150,000 | $15 - $30 | $3 - $8 |
| 100 - 250 employees | $100,000 - $250,000 | $10 - $22 | $2 - $6 |
| 250+ employees | $150,000 - $500,000+ | $5 - $15 | $1 - $4 |
These figures represent the stop loss premium component only. Under a fully self-funded structure, the employer also funds expected claims directly and pays a third-party administrator (TPA) for plan administration - typically $25 - $50 per employee per month. Under a level-funded structure, all three components are bundled into a single fixed monthly payment, and the stop loss carrier is baked into the product. The total all-in cost for a level-funded plan is often 8 - 12% lower than a comparable fully-insured plan for healthy Texas groups.
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We can model specific and aggregate coverage alongside your claims funding and administration costs so you can see the full employer exposure.
What Drives Your Stop Loss Premium in Texas
Specific Attachment Point Selection
The specific attachment point - the per-person dollar threshold where stop loss begins to pay - is the single biggest lever in stop loss pricing. A lower attachment point, such as $25,000, means the stop loss carrier takes responsibility for claims above a lower threshold, which means more risk transferred to them and higher premiums for you. A higher attachment point, such as $150,000, means you're self-insuring a larger portion of each individual claim, which reduces premiums but increases your worst-case exposure per high-cost member.
There's no universally correct attachment point. The right level for your business depends on your claims reserves, your comfort with financial volatility, and the average health profile of your covered employee population. Most Texas TPAs and stop loss carriers model multiple attachment points simultaneously so you can compare the premium savings against the additional risk exposure at each level.
Group Demographics and Claims History
Stop loss underwriting for small groups, under 50 employees, requires individual medical questionnaires or claims data review. Known high-cost conditions - active cancer treatment, ongoing dialysis, recent organ transplant, premature infants in NICU - drive stop loss premiums up significantly and may result in what's called a laser.
What Is a Stop Loss Laser?
A laser is a carrier's practice of increasing the specific attachment point, or excluding coverage entirely, for a known high-cost individual. If Employee A is in active chemotherapy, the stop loss carrier may write coverage for all other employees at a $50,000 specific attachment point but laser Employee A at $300,000 - meaning the employer is responsible for the first $300,000 of that employee's claims before stop loss applies. Reviewing laser provisions before signing a stop loss contract is critical and something a knowledgeable broker handles as a standard step.
Aggregate Attachment Point and Corridor
The aggregate attachment point is typically set at 120 - 125% of the plan's expected total annual claims. If your group of 20 employees is expected to generate $400,000 in annual claims, the aggregate attachment point at 125% would be $500,000. If total claims reach $600,000 in a given plan year, the stop loss carrier reimburses the employer $100,000, the amount exceeding the attachment point. The percentage spread between expected claims and the attachment point is called the aggregate corridor, and it's negotiable.
Level-Funded Plans vs. Standalone Stop Loss
For Texas businesses with 5 - 100 employees, the most common path to stop loss protection is through a level-funded health plan rather than a standalone self-funded arrangement with a separately purchased stop loss policy. Level-funded plans bundle claims funding, stop loss insurance, both specific and aggregate, and TPA administration into a single monthly premium with a defined maximum monthly cost.
The key advantages of level-funded for small Texas groups: one monthly payment instead of three components, typically 8 - 12% cheaper than comparable fully-insured plans for healthy groups, and potential for a year-end refund of unused claims dollars. Our level-funded plans guide covers the structure in depth, including how the stop loss component works within it.
For a direct comparison of what happens when you fully self-fund versus stay fully-insured, our self-funded vs. fully-insured guide walks through the financial trade-offs at different employee counts.
Who Provides Stop Loss Insurance for Texas Businesses?
The Texas stop loss market for small and mid-size employer groups is competitive, with multiple carriers actively writing business in DFW and throughout the state. Major stop loss carriers in the Texas market include Symetra, Sun Life Financial, Tokio Marine HCC (TMHCC), Voya Financial, HM Life Insurance Company, and QBE North America.
Wilkerson Insurance Agency works directly with Tokio Marine HCC (TMHCC), one of the nation's leading stop loss carriers, among others. Access to multiple stop loss carriers - not just one - matters because underwriting appetite and pricing vary meaningfully by carrier based on group demographics, industry, and claims history. A broker who shops the stop loss market gets you genuine competition on price and terms.
Do Texas Small Businesses Need Stop Loss Insurance?
If you're fully-insured, no - your carrier bears all claims risk and stop loss is built into your premium structure. Stop loss becomes necessary the moment you take on direct claims risk through self-funding or level-funding.
If you're evaluating whether a level-funded or self-funded structure makes sense for your Texas business, the stop loss component is what separates a manageable structure from unlimited financial exposure. No Texas employer with fewer than 500 employees should self-fund without both specific and aggregate stop loss coverage. Our stop loss protection guide explains the decision framework in practical terms.
For business owners in the DFW area wanting to see how group health costs compare under different funding structures, our group health costs guide provides current market benchmarks for both fully-insured and level-funded structures.
One high-cost claim can change the economics of a self-funded plan.
Before choosing a funding structure, compare the attachment point, laser provisions, aggregate corridor, claims reserves, and maximum annual exposure across multiple carriers.
Review My Group's Risk →Frequently Asked Questions
Explore Stop Loss Coverage for Your Texas Business
Stop loss insurance is the structural protection that allows Texas businesses to access the cost-saving benefits of self-funded health plans without unlimited financial exposure. Getting the attachment point, laser provisions, and aggregate corridor right requires careful placement across multiple carriers.
Wilkerson Insurance Agency works with self-funded and level-funded employers across Farmers Branch, Dallas, Plano, Carrollton, Irving, and throughout the DFW area to place stop loss coverage and structure group health plans that protect your business and your team.
Request a Quote or call 214-501-9613 to speak with a licensed agent.
For regulatory guidance on stop loss insurance standards, see the NAIC.
Structure Stop Loss Coverage Around Your Business
Wilkerson Insurance Agency can compare specific and aggregate coverage, attachment points, laser provisions, and funding structures across multiple stop loss carriers.
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