- Providing world class service and value for employee benefit group plans since 1987
A level-funded health plan is a type of self-funded health insurance where employers pay a fixed monthly amount to cover three core components:
This model blends the cost predictability of traditional insurance with the flexibility of self-funded plans, making it ideal for small- to mid-sized businesses seeking affordable health benefits without sacrificing quality.
Level funding blends the predictability of a fully insured plan with the cost advantages of self-funding. The employer makes consistent monthly payments, which are allocated into three main components:
✔️ A portion of the payment is set aside to cover employees’ medical claims.
✔️ This acts as a safeguard, protecting employers from excessive claim costs beyond a certain threshold.
✔️ Covers expenses related to claims processing, customer service, and plan management handled by a third-party administrator (TPA).
If claims are lower than anticipated, businesses may be eligible for a refund at the end of the year, providing additional cost savings.
Understanding the distinction between fully insured plans and level-funded plans is critical for cost-conscious employers:
| Fully Insured Plans | Level-Funded Plans |
|---|---|
| Premiums paid to insurer | Fixed monthly payments split into claims, stop-loss, and administrative costs |
| No refunds for low claims | Potential refunds if claims are lower than projected |
| Limited cost control | Transparent pricing and customizable options (e.g., PPO plans, telemedicine) |
| ACA-mandated fees apply | Exempt from some ACA requirements but still meet minimum essential coverage standards |
This model is ideal for businesses that:
✔️ Want to reduce healthcare costs without cutting benefits.
✔️ Seek transparency in where their dollars go.
✔️ Desire flexibility to customize plans (e.g., reference-based pricing, wellness programs).
✔️ Are startups or SMEs struggling with high premiums of traditional insurance.
Health benefits are a top factor in talent retention:
One major advantage of level-funded plans is that they are not subject to certain Affordable Care Act (ACA) regulations that apply to fully insured plans. However, employers offering level-funded plans through providers like Taylor Benefits ensure that plans meet minimum essential coverage standards and provide preventive services at 100% coverage when using in-network providers.
Despite 98% of brokers endorsing level-funded plans as a long-term solution (WellNet Survey), many employers hesitate due to:
Our Self-Funded Program offers:
✅ Tailored plan designs for SMEs.
✅ ACA-compliant coverage with 100% preventive care (in-network).
✅ Proven cost-control strategies and transparent reporting.
Historically, level-funded plans were only available to large employers, but today, small- and mid-sized businesses can also take advantage of this cost-effective approach to employee health benefits. By considering a level-funded health plan, businesses can achieve greater control, transparency, and savings, ensuring they offer employees high-quality healthcare without overspending.
Don’t overpay for traditional insurance. Explore how level-funded health plans from Taylor Benefits can deliver affordable, high-quality coverage while putting you in the driver’s seat.
Ready to Switch? Contact our expert benefits advisor to design a plan that fits your budget and workforce needs.
Under a level‑funded health plan your employer pays a fixed monthly contribution that covers projected claims, administrative fees and stop‑loss insurance. If large claims occur during the year, the stop‑loss coverage kicks in once the claim amounts exceed the threshold set in the contract. That means that while your employer would still be responsible for claims up to the attachment point, the protection built into the plan shields against catastrophic costs beyond that limit. At renewal time your fixed monthly cost may be adjusted based on actual experience (claims, administration, stop‑loss) so it’s smart to review the plan’s contract, be clear about the thresholds and understand how large‑claim risk is managed.
Level-funded health plans are ideal for small to mid-sized businesses with stable employee populations that want predictable monthly costs while retaining the potential to save on unused claims. Startups with 5–100 employees often see the most financial advantage.
In many cases, startup founders can enroll in the same group plan as employees if they receive compensation through the business. Eligibility rules depend on the company structure and the insurer’s underwriting guidelines.
When claims come in below projections, some level funded plans return a portion of unused funds at the end of the plan year. This potential savings can make costs more efficient compared to traditional options.
Todd Taylor oversees most of the marketing and client administration for the agency with help of an incredible team. Todd is a seasoned benefits insurance broker with over 35 years of industry experience. As the Founder and CEO of Taylor Benefits Insurance Agency, Inc., he provides strategic consultations and high-quality support to ensure his clients’ competitive position in the market.
We just started working with Taylor Benefits and could not be happier. Todd gave us quite the education as well as some time saving tools to help us manage our HR and save money too. We are looking forward to a long relationship!”
-Carol, Accounting Manager, recruitment marketing company, Campbell, CA
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