Level-funded health insurance:
self-funded economics with a safety net.

At the close of the year, the carrier lines up what your group actually spent on claims against what you prepaid each month. Come in under, and you get back the unused claims fund. Many carriers split that surplus with you, often evenly, though some hand back the full amount. The money shows up 90 to 180 days after the plan year ends, either as a check or a credit toward next year. How big it runs is hard to predict: a steady group might see 5 to 12 percent, a strong year 18 to 25 percent. Go over expected and there is no refund, but there is no surprise bill either, since stop-loss absorbs the overage.

Specific stop-loss guards you against one person blowing up. When a single claimant runs past their deductible, usually somewhere between 50,000 and 200,000 dollars in a year, the reinsurer covers everything above it. Aggregate stop-loss guards against the whole group having a bad year, kicking in when total claims cross a ceiling, typically 110 to 125 percent of what was expected. Most level-funded plans carry both. Specific is what rescues you from a single cancer case; aggregate is what rescues you when the entire group runs hot at once. Read both attachment points before you sign, because a 50,000 dollar specific deductible behaves nothing like a 200,000 dollar one.

In any single year, no. That is what the aggregate attachment is for, capping your worst case around 110 to 125 percent of expected claims. Over several years, the picture can change. A group with steadily high claims will watch its level-funded renewals climb faster than a fully-insured plan would, because fully-insured blends your risk with thousands of other groups while level-funded prices yours alone. So one rough year stays contained, but a chronic pattern eventually makes level-funded the pricier seat. Straight answer: if you have posted two years running of clearly elevated claims, level-funded is probably not your plan.

Most carriers will technically write it at 5 to 10 enrolled employees, but the size where the economics actually hold up is closer to 25. Under that, your month-to-month claims bounce around so much that you spend more time leaning on stop-loss than you save on the expense load. The comfortable range sits at 50 to 150 employees: big enough for claims to even out, small enough to keep real say over plan design. If you are running 5 to 25 lives, fully-insured or a PEO usually serves you better. Once you clear 150, traditional self-funding tends to win.

Your monthly bill is stacked from four parts: expected claims, administrative fees for claims processing and network access and ACA reporting, specific stop-loss premium, and aggregate stop-loss premium. On a 50-employee group, expected claims usually make up 70 to 78 percent of the total, admin runs 6 to 12 percent, and the two stop-loss layers together land at 12 to 18 percent. Carriers set that expected-claims figure off your past 12 to 24 months of claims, your industry, your age and gender mix, and where your people live. Bring no claims history and expect them to tack on 8 to 15 percent over what the same demographics would cost with real data behind them.

Specific stop-loss does its job. Say your specific deductible is 50,000 dollars. The first 50,000 of that person's claims comes out of your monthly claims fund like anything else. Every dollar past 50,000 belongs to the reinsurer, so a 400,000 dollar claim costs your plan 50,000, not the full amount. Everyone else's coverage rolls on untouched. The real question shows up at renewal, where that claimant might get lasered, meaning a higher deductible aimed just at them, often 100,000 to 200,000 dollars, or your whole specific level might rise. Carriers differ widely here, so Benefitra's standing advice is to get the laser policy in writing before you bind.

With no data, the carrier is guessing, so it defaults to worst-case assumptions for your industry and area and loads 10 to 20 percent over a quote backed by real numbers. A full year lets it see your seasonality and spot large claimants. If you are leaving a fully-insured plan, your old carrier owes you a claims experience report on request, covering the last 12 to 36 months with names redacted. Some carriers quote off as little as 6 months at a steeper load. Start a brand-new group with zero history and your realistic choices are fully-insured or a small-group product priced off ZIP and age alone, which rarely beats the fully-insured rate.