Why Group Level Funding

Level funding health insurance helps businesses control costs with predictable payments and self-funding flexibility. It offers transparency, savings, and protection against high claims while ensuring quality coverage.

How Does Level-Funded Health Insurance Work

Level-funding health insurance helps businesses manage healthcare costs while keeping monthly payments predictable. It combines the reliability of traditional insurance with the flexibility of self-funding. Employers make fixed payments covering claims, administrative costs, and stop-loss protection. If claims are lower than expected, businesses may receive a refund at the end of the plan year, offering a cost-effective way to provide employee health benefits while maintaining financial control.

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Year-End Reallocation

At the end of the plan year, if the total employee medical claims are less than the amount set aside, the employer may receive a refund for the surplus. This reallocation of unused funds is one of the key advantages of level funding, as businesses can benefit from managing claims efficiently. Conversely, if claims exceed expectations, stop-loss insurance will cover the excess.

Fixed Monthly Payments

With level funding, businesses make fixed monthly payments that include:

Claims Funding: Money allocated for employee medical claims.
Administrative Costs: Fees for managing and processing the health plan.
Stop-Loss Insurance: Protection against high, unexpected claims.

This predictability in payments allows businesses to budget with certainty, without the unpredictability of fluctuating claims month to month.

Self-Funded Element

Level funding means that the employer pays for actual medical claims, up to a set limit. This is in contrast to fully insured plans where the insurance company bears the full cost of claims. If claims are lower than expected, the employer may benefit from the leftover funds (as mentioned in the year-end reallocation).

Stop-Loss Insurance Protection

To safeguard against high-cost claims, stop-loss insurance is included in the plan. This ensures that if claims exceed a certain threshold, the insurance will cover the additional expenses, protecting the employer from financial strain.

Transparency and Control

One of the major advantages of level funding is the access to detailed claims data. Employers can see where their healthcare dollars are going and make informed decisions about plan adjustments and employee healthcare needs.

Ideal for Small to Mid-Sized Businesses

Level funding was traditionally only an option for larger companies, but it’s increasingly popular with small and mid-sized businesses seeking to balance cost efficiency and flexibility.

Benefits of Level Funding Health Insurance

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Year-End Refunds

Employers may receive a refund if claims are lower than expected.

Predictable Costs

Fixed monthly payments ensure budget stability.

Transparency

Employers have access to detailed claims data.

Stop-Loss Protection

Safeguards against high, unpredictable claims.

Control

More flexibility in plan design and cost management.

No Obligation Consultation

Level funding health insurance empowers businesses with cost predictability, transparency, and the potential for year-end savings—all while maintaining essential protection against high claims. By choosing this flexible approach, employers can take control of their healthcare expenses without sacrificing quality coverage for their team. Ready to explore how level funding can benefit your business? Contact us today to learn more.