50–500 employees · Self-funded plans
Self-funding and stop-loss for Michigan employers
Self-funding can give you control, data and savings in good years, with stop-loss to cap bad ones. Here’s how it works and the contract terms that matter most.
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- 80% of workers at 200+ firms (KFF)
- Specific & aggregate
- Compliance calendar
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How self-funding works
With a self-funded plan, you pay employees’ covered claims from your own funds instead of buying a group policy. A third-party administrator (TPA) processes claims and gives you network access, a pharmacy benefit manager (PBM) runs drug benefits, and stop-loss insurance limits how much a bad year can cost. KFF reports that 67% of covered workers nationally, and 80% at firms with 200 or more employees, were in self-funded plans in 2025. [KFF 2025]
Self-funded plans are generally governed by federal law (ERISA) rather than state insurance mandates, and the employer acts as plan fiduciary. That brings flexibility and responsibility.
The two kinds of stop-loss
Specific (individual) stop-loss reimburses you when one person’s claims pass a set amount in the contract period.
Aggregate stop-loss reimburses you when total plan claims pass a set percentage of expected claims.
Stop-loss is insurance for the employer, not for employees. The terms (deductible levels, contract basis, lasering and renewal caps) matter as much as the premium.
Request a funding reviewStop-loss terms to understand before you sign
| Term | What it means | What to ask |
|---|---|---|
| Specific deductible | The per-person amount you pay before stop-loss pays | Price at two or three levels; lower deductibles cost more premium |
| Aggregate attachment | Total claims level, usually a percentage of expected claims, above which stop-loss pays | How “expected claims” was set, and whether it’s monthly or annual |
| Contract basis (e.g. 12/12, 12/15, 15/12) | Which months of incurred and paid claims count | What happens to claims incurred before termination but paid after (run-out) |
| Lasering | A higher specific deductible set for one known high-cost person | Is there a no-new-laser provision at renewal? |
| Renewal rate cap | A limit on next year’s stop-loss increase | What conditions apply, and is it in writing? |
| Data rights | Your access to claims and pharmacy data | Can you take the data to another TPA or PBM? |
General industry terms, explained for employers. Your contract’s definitions control.
Is your group ready?
- Usually 50+ enrolled employees (smaller groups often start with level funding)
- Claims history you can get from your current carrier
- Cash flow to handle month-to-month claim swings
- Leadership willing to review reports and act on them
- A plan for compliance: plan document and SPD, nondiscrimination, mental health parity, and federal filings
Compliance items on the calendar
- Gag-clause attestation: every group health plan, insured or self-funded, must attest by December 31, 2026. Self-funded sponsors can delegate to a TPA in writing but stay responsible. [CMS]
- Broker and consultant compensation disclosure of $1,000 or more to the plan fiduciary. [DOL FAB 2021-03]
- ACA reporting on Forms 1094-C and 1095-C for applicable large employers.
Comparing structures? See mid-market funding options and the benefits benchmark.
2-minute advisor Q&A
Self-funding explained
A Nexus advisor answers the questions we hear most. (Video coming soon.)
- Is our group big enough to self-fund?
- What's the difference between specific and aggregate stop-loss?
- What is lasering?
Frequently asked questions
What is stop-loss insurance?
Insurance that reimburses a self-funded employer when claims exceed set limits. Specific stop-loss applies per person; aggregate stop-loss applies to total plan claims.
How many employees do you need to self-fund?
There's no single legal minimum, but full self-funding is most common among larger employers: KFF reports 80% of covered workers at firms with 200 or more employees were in self-funded plans in 2025. Smaller groups often use level funding.
What is lasering in stop-loss?
Setting a higher specific deductible for one person with known high claims. Ask whether your contract limits new lasers at renewal.
Do state insurance mandates apply to self-funded plans?
Self-funded plans are generally governed by federal law under ERISA rather than state insurance mandates, though federal rules such as the ACA's market reforms and mental health parity still apply. Check specifics with your counsel.
Will you sell my information?
No. It goes to one licensed Michigan advisor at Nexus and is never sold.
Where are you on the benefits ladder?
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Small-business pages by region
- Grand Rapids · Kent & Ottawa
- Detroit metro · Wayne, Oakland & Macomb
- Lansing · Ingham, Eaton & Clinton
- Ann Arbor · Washtenaw
Buying coverage for yourself or your family? See Michigan Open Enrollment 2027.