The aggregate stop loss policy is:

• A. Not legal in CA
• B. legal but the ER receives no credit against the security deposit
• C. legal and the excess policy reduces the amount of the security deposit
• D. Not required that the ER include it on the Annual Report

Answer: (D)

Aggregate stop loss acts as a risk-transfer tool that pays out when the employer’s total claims for a period exceed a negotiated amount, providing protection for self-insured plans. In California, this type of coverage is permitted and commonly used to cap aggregate losses. The Annual Report filed with the state is intended to reflect the self-insurance arrangement’s financial picture and the security deposits, not to enumerate every stop-loss contract. Therefore, the policy itself does not have to be included on the Annual Report, making that option the correct one. It’s true that stop-loss can influence the security deposit in some cases, but that relates to deposits rather than the reporting requirement.