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.
We’re ready to help! Call today: 800-903-6066