Level-Funded Health Plans
The benefits of self-funding, without the financial rollercoaster. Level-funded plans offer fixed monthly costs, potential year-end refunds, and real data about your workforce's health claims, all with stop-loss protection built in.
A hybrid approach: the cost predictability of fully insured with the potential upside of self-funding
Think of a level-funded plan like a shared savings account: the employer puts in a fixed amount each month, covering expected claims, stop-loss premiums, and administration, and if the actual claims come in under that estimate at year-end, the surplus comes back to the employer.
This structure is increasingly popular with Texas businesses in the 10–150 employee range because it gives CFOs and HR managers the budget predictability they need while creating a real financial upside when the workforce stays healthy.
What makes up your monthly level amount
At the end of your plan year, the carrier reconciles actual claims against your expected claims fund. Many employers find that in good-claims years, 20–40% of that fund comes back as a refund or credit toward the next plan year. In bad-claims years, the stop-loss kicks in and your exposure is capped at your fixed monthly level. This is the core financial argument for level-funded over fully insured.
Claims data: a tool for better decisions
Unlike fully insured plans where claims data is largely opaque, level-funded plans give employers access to aggregate claims experience (not individual employee data, which is protected under HIPAA), but group-level information that reveals:
- Which claim categories are driving cost (pharmacy, specialty care, etc.)
- How your group compares to benchmark populations
- Where wellness program investment could have the most impact
- Whether plan design changes would shift cost or utilization
A group with recent high-cost claimants or significant chronic conditions may find that a level-funded carrier declines to quote, quotes at a rate higher than fully insured, or loads the stop-loss in a way that removes the financial advantage. We analyze your group's risk profile honestly before recommending a level-funded approach.
See how other Texas companies your size are structuring their health benefits
A level-funded analysis takes about 15 minutes to scope. If the numbers work for your group, you'll see exactly what a year-end refund scenario looks like, and what it doesn't.
Content on this page is for general educational purposes only and does not constitute legal, tax, or ERISA advice. Level-funded plan descriptions are general in nature; actual plan documents, stop-loss agreements, and carrier terms govern. Many employers find that in general level-funded plans can provide cost advantages; individual results vary based on group demographics, claims experience, and plan design. Consult a licensed insurance professional and qualified ERISA counsel for guidance specific to your situation.