Self-Insured Health Plan - Stop-Loss Insurance Premium (Specific and Aggregate)
Recording the premium for specific stop-loss (per-claimant) and aggregate stop-loss (total plan) insurance coverage purchased by a self-insured employer to cap catastrophic health claim exposure.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Stop-Loss Insurance Premium Expense - Health | Expense (+) | 3,200,000.00 | - |
| Prepaid Stop-Loss Insurance (Prorated Monthly) | Asset (+/-) | - | 3,200,000.00 |
| Prepaid Stop-Loss Insurance Expense (Monthly Amortization) | Expense (+) | 266,667.00 | - |
| Prepaid Stop-Loss Insurance (Reduction) | Asset (-) | - | 266,667.00 |
💡 Accountant's Note
Self-insured employers purchase stop-loss insurance to limit their exposure: (1) Specific stop-loss: limits liability per individual claimant (e.g., $300,000 deductible — employer pays first $300K of any one employee's claims, insurer pays above that), and (2) Aggregate stop-loss: limits total plan liability (e.g., 120% of expected claims — if total claims exceed 120% of expected, insurer covers the excess). Premiums are paid annually (or monthly) and recognized ratably over the policy period. Stop-loss receivables arise when a specific claimant exceeds the threshold and the insurer owes reimbursement.
Practitioner & Systems Framework
💻 ERP Architecture
Track each high-cost claimant's year-to-date claims against the specific stop-loss threshold monthly. File stop-loss recovery claims promptly when the threshold is exceeded — stop-loss recoveries can be significant (a single catastrophic illness can trigger $1M+ in stop-loss recoveries). Recognize stop-loss receivables when the threshold is crossed and the recovery is probable and estimable. Net the stop-loss premium against expected recoveries for the net health benefit cost calculation.
⚠️ Audit Flags
Auditors verify that stop-loss receivables are recognized only when the specific deductible is actually exceeded (not anticipated). Large stop-loss receivables near year-end require confirmation from the stop-loss insurer. Premium payments must be traced to the insurer's coverage confirmation. Stop-loss carriers must be solvent — collectibility of receivables depends on insurer financial strength.
📄 Required Documentation
Stop-loss insurance policy (specific and aggregate terms, deductibles, coverage limits), premium payment confirmation, monthly claim tracking by high-cost claimant vs. specific deductible, stop-loss recovery calculation for claimants exceeding threshold, recovery claim submissions to stop-loss insurer, insurer financial strength rating.
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