Seven funding paths.
One honest comparison.
Choosing how your health plan is funded matters more than choosing the carrier. The seven arrangements below trade off the same four levers — risk, cost, transparency, complexity — in different ways. This is the side-by-side that no other brokerage publishes.
The risk-transfer spectrum, plainly
Every funding arrangement is an answer to one question: who bears the claims risk? On the left, the carrier owns it all (and prices it accordingly). On the right, you own it all (and capture the savings — and the bumps). The arrangements in the middle are different ways of splitting the difference.
The chart you're looking at in the background is the spectrum: red at the carrier-bears-everything end, blue at the alternative-pooling end, with the green sweet spots in the middle. Your job isn't to pick the cheapest spot. It's to pick the spot where the risk you take on is risk you can actually absorb.
Side-by-side: the seven arrangements on twelve dimensions
Same plan, same group, three different funding arrangements often produce a 30%+ cost spread over five years. The table below is what we'd want to walk a CFO through in a 30-minute strategy call. Scroll horizontally on mobile.
| Dimension | Fully-Insured5-30 EE | Level-Funded25-150 EE | Self-Funded100+ EE | Captive30-100 EE | ICHRAAny size | PEO5-100 EE | Taft-HartleyMulti-employer |
|---|---|---|---|---|---|---|---|
| Who bears claims risk | Carrier | Shared (capped) | You | Pool | Each individual | PEO sponsor | Trust |
| Typical savings vs. FI | — | 5-15% | 15-30% | 10-25% | 10-25% | 10-20% | Up to 50% (high-cost states) |
| Year-over-year volatility | Renewal-spike risk | Medium | High | Medium-low | Medium | Low | Lowest |
| Surplus on good year | Carrier keeps | 50/50 or 100% | 100% yours | Pool-shared | Underspend belongs to you | Bundled into PEPM | Trust-distributed |
| Claims data access | Limited, delayed | Monthly | Real-time | Monthly + pool | Per-employee carrier | Limited | Trust-level only |
| Plan design flexibility | Carrier templates | Customizable | Fully customizable | Customizable | Employee picks own plan | PEO menu | Trust-set |
| ERISA compliance burden | Carrier owns it | Shared | Fully on you | Shared with captive | Reduced (each employee individually insured) | PEO owns it | Trust owns it |
| Cash flow shape | Fixed monthly | Fixed monthly | Variable claims-as-paid | Fixed monthly | Fixed allowance per EE | Fixed PEPM | Fixed contribution |
| State-mandate exposure | Full | Partial (depends on stop-loss) | ERISA-preempted | ERISA-preempted | Each plan is fully insured | Full | ERISA-preempted |
| Setup time | 30 days | 45-60 days | 90-120 days | 60-90 days | 45-90 days | 30-45 days | Trust enrollment |
| Admin hours / month | 2-4 | 4-8 | 10-20 | 6-12 | 4-8 | 1-2 | 3-6 |
| Read the deep page | Open → | Open → | Open → | Open → | Open → | Open → | Open → |
The decision framework, in five questions
There's no universal right answer — but there is a right answer for your specific group. Walk through these five questions and the funding type usually picks itself.
1 · Group size?
Under 25 EE: Fully-Insured or PEO. Below 25, level-funded math gets unstable. 25-50: Level-Funded is usually the smartest first move beyond fully-insured. 50-150: Level-Funded or Captive depending on claims stability. 150+: Self-Funded becomes worth modeling, Captive stays valid for risk-averse buyers.
2 · Claims history?
Stable (within 5% of expected for last 24 months): Level-Funded or Self-Funded — you'll capture surplus. One bad year: Captive's pool protection is worth its premium. Two consecutive bad years: Stay Fully-Insured until the trend reverses; level-funded won't help.
3 · Workforce shape?
All W-2, single state: Any traditional arrangement works. Multi-state, distributed: ICHRA often beats group plans because employees buy in their own market. 1099/W-2 mix: ICHRA for the W-2 side, contractor stipend for the rest. Unionized trades: Taft-Hartley is usually contractually obligated and provides remarkable rate stability.
4 · HR / Finance infrastructure?
No dedicated HR person: PEO bundles everything; one vendor, one bill. HR generalist + outsourced payroll: Level-Funded works. HR Director + CFO involvement: Self-Funded or Captive — these reward sophistication. Multi-state HR: ICHRA dramatically simplifies multi-state benefits.
5 · State of operation?
High-mandate state (CA, NY, MA, NJ): Self-funding (and by extension level-funded and captive) escapes some of the costliest state mandates via ERISA preemption. Worth more than the headline savings. Low-mandate state (TX, FL, TN): The state-mandate advantage shrinks; pick on cost and operational fit instead.
Open the page that fits your situation
Each arrangement has its own deep page with the full mechanics, FAQs grounded in actual employer questions, and a worked example with real numbers from our client portfolio. Pick where to start.
5-30 EE
Fully-Insured
The carrier eats the risk — and the savings. Right when simplicity beats optimization.
Typical save vs. self-funded: (none — baseline)
Read the page
25-150 EE
Level-Funded
Self-funded economics with a safety net. See your data, keep the surplus, stay protected.
Typical save vs. FI: 5-15%
Read the page
100+ EE
Self-Funded
Stop paying 25-30% margin to a carrier you can't see into. Full transparency, full control.
Typical save vs. FI: 15-30%
Read the page
30-100 EE
Self-Funded Captive
Self-funded economics, pooled risk, laser protection that actually holds at renewal.
Typical save vs. FI: 10-25%
Read the page
Any size
ICHRA
Defined contribution beats defined benefit — for the right employer profile.
Typical save vs. FI: 10-25%
Read the page
5-100 EE
PEO-Integrated
Outsource HR, payroll, benefits, and workers' comp to one vendor. Trade control for simplicity.
Typical save vs. FI: 10-20%
Read the page
Multi-employer
Taft-Hartley
Premium stability that doesn't depend on your group's health. ERISA-protected, trust-pooled.
Typical save vs. FI: up to 50%
Read the page
Frequently asked questions about choosing a funding arrangement
How do I choose between fully-insured, level-funded, self-funded, and captive at 75 employees?
At 75 employees, fully-insured is the safest but typically most expensive option (often 20-30% more than alternatives). Level-funded is the most common starting point — you get monthly claims data, surplus participation, and stop-loss protection at minimal added complexity. A captive becomes attractive if you want self-funded economics with pooled-risk protection (typically 10-20% savings vs. fully-insured plus laser protection). Pure self-funding works at 75 employees only if you have a CFO involved, stable claims history, and tolerance for monthly cash-flow variability. Decision rule: if your prior 24 months of claims have been within 5% of expected, level-funded saves money with low risk. If you've had a single year over 115% of expected, captive's pool protection probably matters more than self-funded's surplus capture.
Which funding arrangement has the lowest year-over-year cost volatility?
Taft-Hartley wins on volatility because rates are set by the multi-employer trust based on the entire pooled membership, not your specific group's claims. A bad claim from one employer doesn't drive the whole trust's rates up sharply — losses are distributed across thousands of employers. Fully-insured is second on stability but only because the carrier hides volatility from you (your renewal can still spike 30-50% when you're rated). PEO is third because the PEO sponsor's scale dilutes individual employer claims. Level-funded, captive, and self-funded are all higher volatility by design — you're seeing your group's actual experience, which is more honest but more variable.
What's the order I should consider funding types in as my company grows from 25 to 250 employees?
At 25-50 EE: start fully-insured or level-funded. Most carriers won't quote level-funded under 25 EE; under 50, the math is borderline. At 50-100 EE: level-funded is usually the right place. Self-funded captive becomes viable at 35+ if you find the right captive (Blackwell, Roundstone, and Pareto have different size cutoffs). At 100-150 EE: stay in level-funded or move to captive depending on claims stability. Pure self-funded becomes worth modeling at 100+. At 150-250 EE: pure self-funded usually pencils out unless your claims are unstable, in which case stay in captive or level-funded. Each transition adds compliance burden — don't move just because you can; move because the math changes meaningfully.
Can I run two funding arrangements at once (like ICHRA + group plan)?
Yes, but only in specific patterns the IRS allows. ICHRA can be offered to one employee class (say, salaried HQ staff) while a traditional group plan covers another class (say, hourly field workers) — that combination is explicitly permitted as long as the classes are defined by IRS-approved categories (full-time vs. part-time, salaried vs. hourly, etc.). You cannot split an arrangement within the same class. PEO + ICHRA is generally not allowed because the PEO arrangement contractually requires the PEO's group plan be the primary offering. PEO + Taft-Hartley is workable for unionized workforces because Taft-Hartley arrangements are pre-existing trust obligations. Most multi-arrangement combos require legal review — there are real ERISA traps.
Which funding type gives me the most claims-data transparency?
Pure self-funded gives you real-time claims data via the TPA's portal. You see every claim as it pays, broken down by member, provider, ICD code, and dollar amount. Self-funded captive gives the same data plus pool-level analytics (how your group compares to other captive members). Level-funded gives you monthly claims reports — typically 30-45 days after the month closes — with similar detail but less immediacy. Fully-insured gives you almost nothing: at most an annual claims-experience report, often with member identifiers redacted. Taft-Hartley and PEO trusts give very limited data because the trust manages claims at the pool level. If transparency is your priority, self-funded > captive > level-funded > everything else.
What does it actually cost (in admin hours per month) to manage each funding type?
Fully-insured: 2-4 hours per month. Mostly enrollment and employee questions. PEO: 1-2 hours. The PEO handles administration entirely. Taft-Hartley: 3-6 hours. Contribution reporting and trust coordination. Level-funded: 4-8 hours. Monthly claims reconciliation, refund tracking, plan-document compliance. Self-funded captive: 6-12 hours. Same as level-funded plus captive governance participation. Pure self-funded: 10-20 hours. Claims reconciliation, stop-loss coordination, ERISA compliance, plan document maintenance, fiduciary oversight. ICHRA: 4-8 hours. Allowance reconciliation, individual-policy tracking, ACA reporting. These are realistic operating ranges for an HR generalist; sophisticated employers often outsource the level-funded/captive/self-funded admin to a benefits consultant rather than handling internally.
If I'm in a state with lots of healthcare regulation (CA, NY, MA), does that change which funding type is best?
Yes, in three specific ways. First: state-mandated benefits (mental health parity expansions, fertility coverage, autism mandates) apply to fully-insured plans but typically NOT to self-funded plans (which fall under federal ERISA preemption). This is one of the strongest arguments for self-funding in CA/NY/MA — you escape some of the costliest state mandates. Second: state premium taxes (1.5-3% in most states) apply to fully-insured but not self-funded, which is real money on a $1M+ plan. Third: state insurance department oversight on rate increases is much heavier for fully-insured plans, which can mean better protection from unjustified hikes but also slower carrier responsiveness. Net: highly-regulated states make self-funding (and by extension level-funded and captive) more attractive than they would be in a low-regulation state.
What are the top three reasons employers switch funding types in 2026?
First, premium increases on renewal are pushing fully-insured groups toward level-funded — the average 2026 fully-insured renewal is running 9-14% per KFF, while level-funded renewals on stable groups are tracking 4-7%. Second, claims-data transparency is becoming a CFO priority — once a finance team sees that 25-30% of premium goes to carrier margin and they can't see what claims are driving costs, level-funded becomes the obvious next move. Third, ICHRA is pulling employers off group plans entirely when their workforce is geographically distributed or has high 1099/W-2 mix — the 11 employee-class rules let employers offer ICHRA to one group while keeping group coverage for another. Switching the wrong direction (jumping straight from fully-insured to self-funded without level-funded as the bridge) is the most common mistake we see.
Want a strategist to walk you through which path fits your group?
Send us your last 12 months of claims experience and group size, and we'll model your group across the three or four arrangements most likely to fit — with the math, the risks, and the renewal behavior of each carrier confirmed in writing.
Schedule a strategy call →