Level-Funded Plans

Lower Costs, Greater Transparency, and Built-In Protection

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A Smarter Alternative to Traditional Group Health Insurance

Level-funded health plans are becoming one of the most talked-about alternatives to traditional fully insured group health insurance. For small and mid-sized businesses, this model offers predictable monthly payments with the opportunity to lower long-term healthcare costs.

If your company is facing rising group health insurance premiums, a level-funded plan may provide greater cost control, transparency, and financial protection — without taking on the full risk of self-funding.

What Is a Level-Funded Plan?

A level-funded health plan is a hybrid between a fully insured plan and a self-funded health plan. Your business pays a fixed monthly amount that includes:

  • Estimated employee medical claims

  • Stop-loss insurance coverage

  • Administrative fees and provider network access

This structure gives you consistent monthly budgeting while protecting your business from large or unexpected claims.

At the end of the plan year, if claims are lower than expected, your company may receive a refund of unused claim funds — something that does not occur with traditional fully insured group health plans.

Why Employers Are Exploring Level-Funding

1. Potential Cost Savings

With traditional group health insurance, premiums increase regardless of your claims performance. A level-funded plan allows employers to benefit when claims are lower than projected, potentially resulting in year-end refunds and long-term savings.

2. Greater Transparency

Level-funded arrangements typically provide access to claims reporting and utilization data. This allows employers to better understand healthcare spending patterns and make informed decisions about future plan design and cost-containment strategies.

3. Budget Stability

Even though the plan includes a self-funded component, your monthly payment remains consistent throughout the year. Stop-loss insurance protects your company from high-cost claims, creating financial predictability.

4. Customization Options

Level-funded health plans often offer more flexibility in plan design compared to fully insured small group plans. Employers may have options related to deductibles, networks, and benefit structures to better align with workforce needs.

Is a Level-Funded Plan Right for Your Business?

Level-funded group health insurance is commonly considered by:

  • Businesses with 2 or more employees

  • Employers seeking alternatives to high renewal increases

  • Companies with relatively stable employee populations

  • Organizations looking for greater control over healthcare costs

Eligibility is subject to underwriting, participation requirements, and overall group risk assessment. A detailed review is necessary to determine whether this strategy is appropriate for your organization.

Let’s Explore Your Options

Every business is different. The right solution depends on your employee demographics, budget, and growth plans.

If you’d like to see whether a level-funded plan could lower your healthcare costs while maintaining strong protection, we’re ready to help.

Schedule a consultation today and take a proactive step toward smarter group health planning.

Frequently Asked Questions

  • A fully insured plan requires you to pay a fixed premium to the insurance carrier, and the carrier assumes all claims risk. A level-funded plan combines elements of self-funding with stop-loss protection. Your business pays a fixed monthly amount that covers estimated claims, administrative costs, and stop-loss insurance. If claims are lower than expected, you may receive a refund at the end of the year — something that does not happen with traditional fully insured group health insurance.

  • Each month, part of your payment goes toward estimated employee medical claims. If total claims at the end of the year are lower than projected, the unused claim funds may be refunded to your business, depending on the carrier’s structure and plan terms. Refund eligibility and amounts vary, and results depend on overall claims performance.

  • Level-funded plans include stop-loss insurance to protect your business from large or unexpected claims. If claims exceed expected levels, stop-loss coverage limits your financial exposure. While higher claims may impact future renewal rates, your monthly costs remain fixed during the plan year.

  • Yes, depending on plan performance. If total claims are lower than projected at the end of the year, unused claim funds may be refunded to your business, subject to carrier terms and plan structure.