Individual Stop-Loss (ISL)

Individual Stop-Loss (ISL) is the self-funded plan protection that reimburses the plan sponsor for any single member's claims that exceed a defined threshold — the specific attachment point — during the plan year. It caps the plan's exposure on any one catastrophic case (a premature baby in NICU, a cancer patient on high-cost specialty therapy, a bone marrow transplant) so that a single high-cost member doesn't blow up the year's claims budget.

The specific attachment point on ISL varies by employer size and risk tolerance. Small self-funded plans (100 to 200 employees) typically buy ISL with a $25,000 to $50,000 specific attachment; mid-size groups often carry $100,000 to $150,000 attachments; larger groups can carry $250,000 or higher. The lower the attachment, the more claims the ISL pays and the higher the premium. Contract terms matter enormously: the "run-in" and "run-out" provisions determine whether claims incurred before or after the plan year are covered, and "laser" language allows the stop-loss carrier to exclude specific known-high-cost individuals from coverage at renewal. Aggregating specific stop-loss (a hybrid design) can smooth cash flow. TPA-friendly stop-loss contracts also matter — some contracts require the plan to advance-pay all claims before ISL reimburses, which creates cash-flow strain the employer needs to plan around.

The takeaway: if you're self-funded, the ISL specific attachment point is the single most important number in your stop-loss contract. Model it against your last five years of highest-cost claimants and pick a level that protects you from a black-swan year without paying for insurance you don't need on a normal year.