What Self-Insured Employers Need to Know About Lasering in Stop Loss Coverage
If you came here looking for laser hair removal or military-grade weaponry—you’re in the wrong place. But if you’re managing a self-funded health plan and want to understand how lasering in stop loss insurance can impact your risk (and your budget), you’re exactly where you need to be.
In this article, we’ll break down what lasering is, why it matters, and how employers can protect themselves from high-dollar claim surprises.
WATCH: What Is Lasering in Stop Loss—and How Can Employers Protect Themselves?
What Is Stop Loss Insurance?
Self-insured employers don’t pay fixed premiums to a carrier—they fund claims as they happen. That works well—until a shock claim hits. With claims sometimes exceeding $1 million, that kind of unexpected expense can put a serious strain on your plan.
That’s why many employers purchase stop loss coverage. This insurance protects you by capping the amount you’ll pay per member in a given year. For example, if your stop loss deductible is $100,000, the carrier will pay anything above that for a covered individual.
Think of it as a safety net against catastrophic claims.
What Is Lasering?
Now, let’s talk about lasering—a clause that can turn that safety net into something a lot less stable.
At renewal time, a stop loss carrier may choose to “laser” specific high-risk individuals. Instead of applying the standard deductible (e.g., $100,000), they’ll assign a much higher deductible to that person—say, $500,000 or more.
Here’s a scenario:
Your plan has a $100,000 stop loss deductible.
One member, Sally, is older and expecting triplets.
The stop loss carrier sees her as high risk and places a laser on her and her unborn children—each with a $500,000 deductible.
What would’ve been a $400,000 total claim exposure now becomes a $2 million risk for your plan. That’s the danger of lasering: it shifts liability back onto the employer, often with little warning.
Why Lasering Matters for Self-Funded Employers
Lasering fundamentally changes your risk profile. If you don’t know whether your current stop loss contract allows for lasers, you may be unknowingly exposed to substantial liability. And not all contracts are created equal.
Some stop loss policies include:
No protection against lasers at all
No new lasers at renewal
No new lasers in perpetuity ← This is the gold standard
How to Protect Yourself Against Lasers
The best way to mitigate lasering risk is to secure favorable contract terms—especially the “no new lasers in perpetuity” clause. One way employers are increasingly gaining this kind of protection is through captives or consortiums.
These group arrangements can offer:
Better stop loss terms
Greater negotiation power
Shared risk and cost smoothing
Long-term contract protections
Final Thoughts
Lasering in stop loss insurance is one of the most important—and least understood—elements of a self-funded health plan. It can dramatically increase your financial risk if not managed correctly. Understanding your current pharmacy benefit manager contract, negotiating protections, and exploring options like captives or consortiums are key steps for smart employers.