Level-funded health plans
Level-funded health plans give you a steady monthly cost like a traditional plan, priced on your team's own health. Healthier groups often pay less, and some plans refund part of what goes unused.
Best fit: Healthier teams open to a short health questionnaire
How level-funded health plans work
Your monthly payment covers three things:
- A claims fund sized to what your group is expected to spend on care.
- Administration, including the network, claims processing and member services.
- Stop-loss insurance, which pays when claims run past set limits, for one person or for the whole group.
The payment stays the same every month. If claims come in under the fund at year end, some plans return part of the surplus or credit it toward next year. If claims come in over, stop-loss covers the difference.
How pricing differs
Fully insured small group plans must ignore health when setting rates. Level-funded plans do not follow those rating rules. They price your group from a health questionnaire, or from past claims for larger groups.
That cuts both ways. A young, healthy team can see rates well below the fully insured market. A team with ongoing health conditions can see a higher quote or a decline. That is why we price both before you choose.
What still applies
Level-funded plans fall under federal benefits law, and many ACA rules still apply. Preventive care is covered without cost sharing, adult children can stay on until 26, and there are no lifetime dollar limits on ACA-required benefits. State benefit mandates that apply to insured plans often do not, so read the plan summary closely.
Who it fits
- Teams of mostly younger, healthier employees
- Employers facing a steep fully insured renewal
- Owners who want claims reports and a chance at a refund
- Groups willing to fill out a short health questionnaire
Level-funded or fully insured?
The honest answer depends on your team. A fully insured small group plan protects you from health-based pricing, which matters if someone on your team has an ongoing condition. A level-funded plan rewards a healthy group with a lower rate and the chance of a refund. Teams that want a fixed budget with no health questions at all can look at an ICHRA instead.
Level-funded plans are sold in most states, including Kansas and Missouri, where steep 2027 rate requests have more small employers pricing them. Our renewal checklist shows when to start comparing.
Things to check before you sign
- Stop-loss terms. Look at the per-person limit and whether the contract caps your renewal increase.
- Surplus terms. Find out how much of a surplus comes back, when, and whether you must renew to get it.
- Run-out. Ask how claims filed after the plan year ends get paid if you leave.
- State rules. A few states limit stop-loss for small employers. We confirm what is allowed where you are.
Compare your options
Tell us about your group. A licensed agent compares the carriers in your area and follows up with options.
Common questions
Something else? Ask a licensed agent.
Is a level-funded plan the same as self-funding?
It is a form of self-funding built for smaller employers. You pay a level monthly amount instead of paying claims as they come in, and stop-loss insurance caps how much you can owe in a bad year.
Why do level-funded plans ask health questions?
Level-funded plans are not priced under ACA small group rules, so the carrier or administrator prices your group from its expected claims. A short health questionnaire, or past claims data for larger groups, sets that expectation.
What happens if our claims come in high?
Stop-loss coverage pays claims above the limits set in your contract, so your monthly cost does not change during the plan year. High claims can lead to a larger increase at renewal, and you can move back to a fully insured plan at that point.
Do employees notice a difference?
Usually not. Employees get ID cards, use a carrier network and file claims the same way they would on a fully insured plan.
Can every small business get a level-funded plan?
No. Minimum group sizes vary by carrier, and a few states limit stop-loss sales to small employers. The health questionnaire can also lead to a high quote or a decline. We check what is available for your group before you spend time on it.
Other ways to cover your team
Compare all plan types- Small group health insurance Best fit: Most teams of 1 to 50 that want a traditional plan A fully insured plan from one carrier. You pay a fixed monthly premium, and ACA rules mean health history never changes your price.
- ICHRA Best fit: Teams spread across states, or owners who want a set budget You set a monthly allowance. Employees pick their own individual plans, and you reimburse them tax free. Works for any company size.
- QSEHRA Best fit: Businesses under 50 employees with no group plan A simple reimbursement plan with yearly limits set by the IRS. A low-cost first step for very small teams.
- Group dental and vision Best fit: Any employer adding benefits beside a health plan Low-cost add-ons employees use every year. Offer them with your health plan or on their own, paid by you, your team or both.
- Group life and disability Best fit: Employers rounding out a benefits package Employer-paid life insurance plus short-term and long-term disability coverage that protects your team's income. Group rates often beat individual policies.
See if level-funding beats your renewal
Tell us about your team. We will price a level-funded plan next to fully insured options so you can compare the real numbers.
- Free, with no obligation to buy
- Small group, level-funded and ICHRA compared
- A licensed agent handles your request