Moving right, you take on more claims risk. In exchange you see more of your data and keep more of what you don't spend.
A level-funded health plan is a self-funded arrangement packaged with stop-loss coverage so the employer pays a steady monthly amount. If claims are lower than projected, the employer may receive part of the surplus.
How it works
Your monthly payment has three parts. One covers administration, one buys stop-loss insurance and the rest goes into a claims fund. Claims are paid from that fund. If claims run past it, stop-loss picks up the excess, so your monthly cost doesn't change mid-year.
To your employees, it usually looks like any other plan from a well-known carrier. Same kind of ID card, same networks.
Why employers move to it
Claims visibility is the big one. You get monthly reports, so you can see where money is going and what's pushing costs up. That makes cost containment something you can actually work on rather than guess at.
Pricing is based on your own group rather than the whole small-group market, so a healthy group can see upfront savings compared with ACA rates. And if claims come in under the fund, part of the surplus may come back to you after the plan year.
When it tends to make sense
Level funding often works well for small and mid-sized employers with a reasonably healthy group who want a fixed budget but are tired of renewals they can't explain.
It's less suitable if someone on the plan has very high ongoing claims, because underwriting looks at group health. In that case ACA pricing may protect you better, and we'll say so.
What to check before signing
Level-funded programs differ more than the marketing suggests. We read the fine print for you.
How much of any surplus you get back, and when
What happens to renewal rates after a bad year
Whether the stop-loss contract covers claims paid after the plan ends
How easy it is to move back to a fully insured plan
What PAKG does
We gather the census and health information carriers need, compare level-funded quotes against your fully insured options and walk you through the real difference in cost and risk. After you move, we read the monthly reports with you so the data gets used.
What changes from one approach to the next
Factor
Fully insured
Level funded
Captive
Self-funded
Who pays claims
The carrier
A claims fund inside your monthly payment
You, up to a set level, then the shared pool
You, up to your stop-loss limits
Monthly cost
Fixed premium
Fixed monthly amount
Fixed fees plus claims that vary
Fixed fees plus claims that vary
Claims reporting
Very little
Monthly reports
Detailed
The most detail
After a low-claims year
The carrier keeps the difference
A surplus may come back to you
You keep unused funds, and the pool may return some
You keep what you didn't spend
Plan design flexibility
Carrier plan menus
Some flexibility
Considerable
The most
General comparison. Actual terms depend on the carrier, the program and your group.
“PAKG was able to take our age-based small group plan to a level-funded plan that resulted in a massive cost savings to both our company and every single enrolled employee.”
Jessica G., Director of Operations
Common questions
What is the difference between fully insured and level funded?
With a fully insured plan, the carrier takes on all claims risk for a fixed premium. A level-funded plan also has a fixed monthly cost, but it is built on your group's actual claims, gives you more reporting, and may return a surplus if claims come in lower than expected.
How many employees do you need to self-fund?
PAKG generally starts evaluating self-funding for employers with 50 or more enrolled employees. Group health, cash flow and risk tolerance matter as much as headcount.
Do employees notice a difference with a level-funded plan?
Usually very little. Employees get ID cards and use a carrier's network much like they would on a fully insured plan.
