Small business health insurance in Michigan

Michigan is home to nearly 166,000 small businesses with fewer than 50 employees¹. But only about 29% currently offer health coverage². This isn’t necessarily surprising. Fully insured group plans can be costly, and self-funded arrangements carry the risk of large, unpredictable medical claims. Still, other options can provide meaningful coverage without straining your bottom line.

This guide will help Michigan employers understand the importance of health benefits and what their options are when looking for cost-effective, flexible alternatives to traditional group plans.

Integrated HRAs

If you already provide group health coverage but want to help employees manage high out-of-pocket costs, a group coverage HRA (GCHRA) could be a solution. Available to businesses of any size, a GCHRA lets you reimburse workers tax-free for eligible medical expenses not fully covered by your group plan.

Eligible expenses include cost-sharing amounts, like:

• Deductibles: This is the amount an employee pays for care before their insurance begins covering services.
• Coinsurance: This is the percentage of costs employees pay after meeting their annual deductible.
• Copays: This is the fixed fee employees pay for certain medical services or prescriptions.

Like other HRAs, employers set a monthly GCHRA allowance, and employees submit claim documentation of qualified purchases for reimbursement up to their set limit. While group plan premiums are ineligible expenses, pairing a GCHRA with a high deductible health plan (HDHP) can keep premiums low while helping employees with out-of-pocket costs.

These HRAs are also highly flexible. There’s no set minimum or maximum contribution amount, and you can customize allowances and eligibility requirements by employee classes to better match your budgetary and employees’ needs.

Self-funded health plans

Some Michigan employers choose self-funded group coverage for more control over costs and plan design. Instead of paying fixed premiums to an insurer, you pay employees’ claims directly, which can create opportunities for savings and customization. However, self-insurance comes with significant financial risk, especially if claims spike unexpectedly. It also requires more administrative oversight.

If traditional self-funding feels too risky, level-funded plans may offer a middle ground. These policies combine self-funding with stop-loss insurance to cap losses from large claims. While they can reduce some risk, they may still be too complex or costly for small businesses.

Additionally, frequent high-cost claims could result in the stop-loss carrier excluding certain employees from coverage, leaving the employer responsible for those large expenses.

Stand-alone HRAs

When you compare the cost of individual and group health insurance in Michigan, individual plans are often less than you think.

Below are the average monthly premiums for a 50-year-old with a silver plan in some of the most populated Michigan counties in 2025:

All table data from Ideon’s 2025 premium comparison map⁵. 

For Michigan small businesses looking for a cost-friendly alternative to traditional group health coverage, stand-alone HRAs can be an excellent fit. These benefits allow you to reimburse employees tax-free for their individual health insurance premiums and other eligible medical expenses.

There are two main types:

1. Individual coverage HRAs. The ICHRA is available to employers of any size, with no required minimum or maximum contribution. You can set different allowance amounts and eligibility rules based on employee classes or family status. To participate, employees must have an ACA-qualified individual health plan. 
   1. Applicable large employers (ALEs) can also use ICHRAs to meet the ACA’s employer mandate without offering a group plan.
2. Qualified small employer HRAs. The QSEHRA is for businesses with fewer than 50 FTEs. QSEHRAs have annual maximum limits set by the IRS, but there are no minimum restrictions. Employees must have a health plan that provides MEC to use the benefit.

Because individual premiums in Michigan are lower than group premiums in several counties, ICHRAs and QSEHRAs can be affordable, sustainable ways for small and mid-sized employers to provide meaningful health benefits.

Association health plans

Some Michigan small businesses may choose to join an association health plan (AHP). This lets companies in the same industry or geographic region band together to buy group health insurance at lower rates.

While AHPs work like standard group plans, they don’t have to follow all ACA requirements. For example, they don’t fulfill the employer mandate for ALEs. Additionally, their plans typically offer limited coverage, so evaluating whether an AHP meets your employees’ healthcare needs is key.

For employers who want more flexibility, control, and predictable costs, HRAs often offer a more customizable solution than AHPs.

Supplemental and ancillary health insurance benefits

Even the best major medical plans can leave coverage gaps. But supplemental and ancillary benefits can help fill them. These extra benefits enhance your overall compensation package and give employees added peace of mind when seeking medical care.

While these plans typically don’t meet MEC requirements on their own, they can complement your primary health benefits — whether you offer traditional group coverage, a self-funded plan, or an HRA.

Common supplemental and ancillary benefits include:

• Critical illness insurance pays out a lump sum if an employee has a serious condition like cancer or heart disease.
• Accident insurance covers out-of-pocket medical expenses related to accidental injuries.
• Vision and dental insurance covers routine exams, cleanings, and other preventive care. These services are also HRA-eligible expenses.
• Hospital indemnity insurance provides plan participants with daily cash benefits during hospital stays.
• Health savings accounts (HSAs) are tax-advantaged benefits for employees with qualified HDHPs. Both employer and employee can contribute, and the funds stay with the employee even if they leave the company.
• Flexible spending accounts (FSAs) allow employees to set aside pre-tax dollars for out-of-pocket medical expenses. However, FSA account holders can’t use FSA funds to pay for health insurance premiums.

By adding these options, you can complete your health benefits package and reinforce your reputation as an employer who values employee well-being.

While the State of Michigan regulates health plans, residents seeking individual coverage shop on the federal Health Insurance Marketplace at HealthCare.gov⁷. During the 2024 Open Enrollment Period, more than 418,000 Michigan residents signed up for coverage through the Marketplace.

Here are the enrollment timelines:

1. In Michigan, the annual Open Enrollment Period currently runs from November 1 to January 15. However, due to a new CMS final rule, the window will shift to November 1 through December 15, beginning with the 2026 open enrollment period for 2027 coverage⁸. 
2. Individuals can only enroll or change their plan outside of Open Enrollment if they qualify for a special enrollment period (SEP). Certain life events trigger SEPs, like losing employer coverage, getting married, or welcoming a new child. Offering an ICHRA or QSEHRA midyear also creates an SEP for eligible employees to buy individual coverage.

The following is a list of health insurance carriers offering individual plans in 2025.

All table data from HealthCare.gov’s rate review site⁹.

Many Michigan residents qualify for help paying premiums. In 2024, more than 87% of Michigan enrollees through HealthCare.gov received premium tax credits to reduce their monthly health insurance costs. However, with enhanced tax credits set to expire at the end of 2025, this number may drop sharply for 2026.

When employees leave your company, they lose access to their employer-sponsored health insurance. However, under the federal Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), certain individuals can temporarily keep their group coverage for a set period of time after separation.

How federal COBRA works:

• Eligibility. Employees who voluntarily resign, retire, or are laid off for reasons other than gross misconduct may qualify. 
  • Spouses and dependents can also be eligible in cases such as divorce, the employee’s death, or when a dependent turns 26 and ages out of the plan.
• Coverage period. COBRA generally extends coverage for up to 18 months, with the possibility of longer extensions in special circumstances.
• Affected companies. Federal COBRA applies to employers with 20 or more employees that offer fully insured group health plans. It doesn’t apply to self-funded plans.
• Cost. Former employees must pay the full premium themselves plus a small administrative fee.

Michigan doesn’t have a Mini-COBRA law for small employers with fewer than 20 employees. However, under the Michigan Non-Profit Health Care Corporation Reform Act, employers must offer eligible employees who lose group health coverage the option to convert their group plan into an individual health insurance policy¹⁰. 

How Michigan’s conversion coverage law works:

• Eligibility. Employees enrolled in their employer’s group plan for at least three months who lost coverage due to policy termination or employment termination (other than for gross misconduct) may qualify. 
  • Spouses and dependents can also convert coverage if the employee passes away or the dependent is no longer eligible under the group plan.
• Notification. Employers must notify employees about their right to convert within 14 days of losing coverage. Employees then have up to 30 days after termination to inform the insurance company if they want to switch to an individual policy.
• Cost. Premiums depend on the collective experience of all similar Michigan conversion policies, not the individual’s claims history. The employee must pay the first month’s premium when electing conversion coverage.
• Effective date. The individual policy begins immediately after the group plan period ends.

For small and mid-sized Michigan businesses searching for a more straightforward, affordable way to offer health benefits, PeopleKeep by Remodel Health is the solution. Our user-friendly platform helps you create customized HRAs that give employees control over their healthcare coverage while reducing administrative workload for your business.

With PeopleKeep by Remodel Health, you can:

• Provide QSEHRA, ICHRA, or GCHRA benefits so employees can choose ACA-compliant health plans that fit their needs.
• Create a benefits strategy that matches your company’s size, budget, and goals without locking yourself into a limited traditional group plan.
• Use our comprehensive tools to efficiently handle reimbursements, organize documents, and track compliance requirements.
• Receive updates on federal and Michigan-specific regulations to avoid penalties or tax issues.
• Allow staff with a QSEHRA or ICHRA to browse and select their own individual insurance plans directly through the PeopleKeep dashboard.

If you already work with a benefits broker, we can integrate seamlessly. Your broker can continue advising on plan choices while working with us to design the right HRA benefit for your team.

For growing businesses with more complex needs and support, Remodel Health’s ICHRA+® solution delivers hands-on support, advanced compliance tools, and enhanced administrative resources to help you manage a larger or more diverse workforce.