Most employer-sponsored health benefit plans are self-funded, which means the employer directly pays the claims, although they typically hire someone to actually do the administration–pay claims, manage utilization, bring a provider network. Most large health insurers and the Blues plans offer these administrative services. In addition, most employers buy what is referred to as stop loss insurance that will cover the costs of any single claim over a certain amount and of all claims in aggregate over some amount. As you might imagine, large claims have risen, and along with that so have stop loss premiums. This adds to the total cost of health benefits to an employer and also to employees via contributions to the cost of the health plan.
An article from Mark Farrah Associates examines state filings to determine the stop loss premium trend. Looking at costs for the last few years, you can see a rise in the “loss ratio”, or the percent of premiums used to pay claims from 79% in 2023 to 91% in 2025. That means less profit and lower dollars for reserves among the stop-loss insurers. Premiums were subsequently raised significantly in 2026 and will be again for 2027. The total stop loss premium is over $50 billion, so this is a not-insignificant market and portion of employer health benefit costs. (MFA Article)
