What is the Stacked Income Protection 

Plan? 

The Stacked Income Protection Plan (STAX) is a crop 

insurance product for upland cotton that provides 

coverage for a portion of the expected revenue for your 

area. Most often your area will be your county; 

however, your area may include other counties or even 

practices as necessary to obtain a credible amount of 

data to establish an expected yield and premium rate. 

STAX may be purchased on its own, or in conjunction 

with another policy referred to as a “companion policy.” 

Companion policies may include Yield Protection, 

Revenue Protection, Revenue Protection with the 

Harvest Price Exclusion, and any of the Area Risk 

Protection Insurance policies. Beginning with the 2017 

crop year, you may also purchase STAX if your farm is 

covered under the Whole-Farm Revenue Protection 

policy. The Federal government will pay for 80 percent 

of the premium cost for STAX.

STAX is available in all counties where Federal crop 

insurance coverage for upland cotton is offered.

How does STAX work?

STAX provides coverage for up to 20 percent of the 

expected area revenue in increments of 5, 10, 15 or 20 

percent. Loss payments begin when area revenue falls 

below 90 percent of its expected level – although a lower 

loss trigger may be selected. Loss payments reach their 

maximum when area revenue falls to 70 percent of its 

expected level – unless your companion policy has a 

coverage level above 70 percent in which case payments 

end sooner. Like other area plans of insurance, the 

amount of coverage may also be increased or decreased 

by selection of a protection factor so that growers may 

better tailor their coverage to their risks. 

The amount of STAX coverage depends on the expected 

yield, projected price, coverage range, and protection 

factor. The expected yield for STAX will be based on 

the historical average of yields in the county reported to 

RMA by insured growers. In areas where the yield data 

are thin, counties will be combined in order to 

accumulate enough data to determine expected yields 

and premium rates. STAX pays a loss based on an areawide basis. An indemnity is triggered when there is an 

area loss in revenue. 

The following example helps clarify how STAX 

coverage is determined in the tables below. To begin, 

we’ll use cotton with an expected crop value for the area 

of $538.20 per acre (690 pounds at $0.78 per pound). 

Assume the grower also purchases a Revenue Protection 

policy with a 75 percent coverage level – this is the 

“companion policy.” (The purchase of the Revenue 

Protection policy is not necessary to purchase STAX.) 

The calculation of STAX coverage is described in the 

following table. 

In this example, the STAX Endorsement begins to pay 

when area revenue falls below 90 percent of its expected 

level. The full amount of the STAX coverage is paid out 

when the area average revenue falls to 75 percent.

The dollar amount of STAX coverage is based on the 

coverage range and protection factor selected. In this 

example, there are 15 percentage points of coverage –

from 90 percent down to 75 percent – and the protection 

A Risk Management Agency Fact Sheet

Stacked Income Protection Plan (STAX) 

for Upland Cotton

Revised July 2016

United States 

Department 

of Agriculture

This fact sheet gives only a general overview of the crop insurance program and is not a complete policy. For further information and an 

evaluation of your risk management needs, contact a crop insurance agent. 

Step STAX Coverage Calculation

A

STAX begins to pay when area revenue falls below 

this percent of its expected level (grower may select 

from 90% down to 75%)

90%

B

STAX Endorsement pays out its full amount 

(liability) when area revenue falls to this percent of its 

expected level (equal to the higher of 70% or the 

coverage level percentage of the companion policy. 

In this case the companion revenue policy brings this 

to 75%)

75%

C Coverage Range of STAX (A – B) 15%

D

Protection factor (grower may change the amount of 

coverage by selecting a protection factor from 0.80 to 

1.20)

1.20

E Amount of STAX Protection (C x D x $538.20) $96.88
factor selected is 1.20. Therefore, 15 percent of the 

expected area revenue, multiplied by the selected 

protection factor of 1.20 equals $96.88 (or 15 percent x 

1.20 x $538.20). Thus, the STAX policy can cover up to 

$96.88 in addition to what is covered by the companion 

policy. 

STAX payments are determined only by area average 

revenue, and are not affected by whether a grower 

receives a payment on their companion policy (if 

purchased). So it is possible for a grower to experience 

an individual loss on his or her companion policy, but 

not trigger an area-based STAX payment (i.e. grower 

does poorly but the overall area does well), or viceversa.

How do I purchase STAX? 

You may purchase STAX the same way as for any crop 

insurance policy, through your crop insurance agent. 

You must also decide if you want to purchase STAX 

alone or with another crop insurance policy as identified 

above. 

If you choose to purchase STAX with a companion 

policy, it must be done by the sales closing date and with 

the same insurance company. The coverage level of the 

companion policy can affect the amount of coverage that 

STAX provides.

How much does STAX cost? 

The Federal government will pay 80 percent of the 

premium. The exact premium cost will depend on the 

area, coverage range selected, and protection factor 

selected. You should consult your crop insurance agent 

for detailed price quotes. 

Where is STAX be available?

STAX is available in all counties where insurance 

coverage for upland cotton is offered. It is also offered 

by practice (irrigated or non-irrigated) where possible.

When are the expected yields and premium 

rates for STAX be available?

The expected yields and premium rates are available in 

the fall of the year preceding coverage, when the 

actuarial documents for STAX are released.

Is STAX coverage available for cottonseed? 

You may elect an optional endorsement for STAX 

which will provide yield only coverage for cottonseed at 

the same coverage range and protection factor as the 

underlying STAX policy.

Where to Buy Crop Insurance

All crop insurance policies are available from private 

crop insurance agents. A list of crop insurance agents 

is available at all USDA service centers and on the 

RMA website at 

www.rma.usda.gov/tools/agent.html.

Contact Us 

USDA/RMA 

Mail Stop 0801 

1400 Independence Ave., SW 

Washington, DC 20250 

Phone: (202) 720-0723 

Fax: (202) 690-2818 

Website: www.rma.usda.gov

Email: rma.media.requests@rma.usda.gov

USDA is an equal opportunity provider and employer. To file a complaint of discrimination, write: USDA, Office of the Assistant Secretary for 

Civil Rights, Office of Adjudication, 1400 Independence Ave., SW, Washington, DC 20250-9410 or call (866) 632-9992 (Toll-free Customer 

Service), (800) 877-8339 (Local or Federal relay), (866) 377-8642 (Relay voice users).