How much can Massachusetts employers save with level-funded vs fully insured?

Based on Massachusetts's average fully insured PEPM of $810 and typical level-funded discounts, employers can expect to save approximately 9% on a level-funded plan in the expected claims scenario. Best-case savings with surplus refunds can reach 20-30%. The Massachusetts cost index of 1.18 affects both fully insured and level-funded pricing.

What is the stop-loss cost for level-funded plans in Massachusetts?

Stop-loss costs in Massachusetts are indexed at 1.15 relative to the national average. For a $50,000 individual specific attachment point, expect approximately $155 x 1.15 = $178 PEPM before age and industry adjustments. Lower attachment points ($25K-$40K) provide more protection but cost more.

What are the risks of level-funded plans in Massachusetts?

The primary risk is that actual claims exceed the claims fund, requiring the employer to cover the shortfall up to the aggregate stop-loss corridor (typically 125% of expected). However, specific stop-loss caps individual catastrophic claims, and aggregate stop-loss caps total group exposure. In Massachusetts, the moderate carrier market provides regulatory constraints and high baseline costs limit savings potential.

What carriers offer level-funded plans in Massachusetts?

Level-funded carriers in Massachusetts include UnitedHealthcare Level-Funded, Cigna Level-Funded. Fully insured carriers for comparison include Blue Cross Blue Shield of MA, Harvard Pilgrim, Tufts Health Plan, UnitedHealthcare. Massachusetts's level-funded market is classified as moderate, with a minimum group size of 5 employees for most carriers.

Massachusetts Level-Funded vs Fully Insured
Savings Calculator

Compare level-funded and fully insured health plan costs for your Massachusetts business. See potential savings, surplus refunds, and worst-case scenarios -- powered by Massachusetts-specific carrier data and actuarial benchmarks.

Massachusetts Level-Funded Market at a Glance

Avg FI Premium PEPM

$810/mo

LF Savings Potential

9% avg

Cost vs National Avg

+17%

LF Market

Moderate

Min Group Size: 5 employees

Surplus Return: 35-60% of unused claims fund

LF Carriers: UnitedHealthcare Level-Funded, Cigna Level-Funded

Mandates: Among the most extensive state mandates in the nation, including infertility, autism, and minimum creditable coverage

Your Company

Tell us about your Massachusetts business so we can model level-funded vs fully insured costs using Massachusetts-specific rates and carrier data.

State ?Massachusetts has a cost index of 1.18 relative to the national average (1.00). This affects claims fund calculations, stop-loss pricing, and overall level-funded plan costs.Source: KFF 2025 State Health Facts; CMS GPCI Data

Number of Employees ?Full-time employees eligible for health benefits. Level-funded plans in Massachusetts are available for groups of 5+ employees. Groups of 10-250 are the sweet spot for level-funded savings.Source: KFF 2025 EHBS; UnitedHealthcare Level-Funded Underwriting Guidelines

Average Employee Age ?Average age of covered employees. Level-funded underwriting heavily weights age. Each year above 40 adds roughly 2-3% to expected claims. Younger groups get better rates and lower stop-loss premiums.Source: CMS Federal Age Curve; SOA Group Health Experience Study

Industry ?Industry affects claims experience and level-funded pricing. Healthcare and construction workers tend to have higher claims. Tech and professional services trend lower. Carriers use SIC/NAICS codes for underwriting.Source: SOA Group Health Experience Study; Mercer National Survey 2025

Coverage Tier Mix ?Distribution of employees across coverage tiers affects blended costs. National average: ~55% single, ~15% EE+spouse, ~30% family. Adjust to match your workforce.Source: KFF 2025 Employer Health Benefits Survey

% Employee Only

60%

% EE + Spouse

20%

% Family

20%

Current Plan & Level-Funded Model

Enter your current fully insured costs and configure the level-funded model parameters. We'll show a side-by-side comparison using Massachusetts-specific data.

Current Monthly Premium PEPM ($) ?Per-employee-per-month blended premium (employer + employee share). Massachusetts's average is ~$810/mo for single coverage. If you don't have current coverage, use the Massachusetts average as a benchmark.Source: KFF 2025 Employer Health Benefits Survey; Massachusetts DOI Rate Filings

Annual Renewal Increase ?Expected annual increase in fully insured premiums. Massachusetts's average trend is 8.5%. Fully insured renewals average 7-12% nationally. Level-funded plans are less susceptible to renewal shock.Source: Mercer National Survey 2025; Segal Health Plan Cost Trend Survey

10%

Plan Tier ?ACA metal tiers determine actuarial value. Higher tiers mean richer benefits and higher premiums, but also higher expected claims in a level-funded model.Source: CMS Actuarial Value Calculator

Expected Claims Ratio ?Portion of premium going to medical claims. Fully insured carriers run 80-85% loss ratios (ACA MLR floor). Level-funded plans target 65-75% expected claims as a percentage of the fully insured equivalent premium.Source: ACA Medical Loss Ratio Rules; TrustMark/Voya Level-Funded Reference Data

70%

Stop-Loss Attachment Point ?Per-person annual deductible on stop-loss policy. Claims above this for any individual are covered by stop-loss. Lower attachment = more protection but higher premium. Massachusetts's stop-loss factor is 1.15x national average.Source: NAIC Stop-Loss Model Act; Sun Life/Voya Stop-Loss Rate Manuals

Admin Fee Estimate ?TPA fees, network access, and plan management costs. Typically 12-18% of the fully insured equivalent premium. Includes claims adjudication, reporting, compliance, and customer service.Source: Mercer National Survey 2025; SPBA TPA Fee Benchmark Study

15%

Include Pharmacy Carve-Out? ?Carving out pharmacy to a separate PBM can reduce costs by 5-10% on the pharmacy component, which is typically 25-30% of total claims. Adds complexity but improves transparency.Source: Pharmacy Benefit Management Institute; PBMI 2024 Trends Report

Level-Funded Health Insurance in Massachusetts: What Employers Need to Know

Massachusetts has one of the most heavily regulated health insurance markets in the country, and this regulation extends to level-funded arrangements. The state's cost index of 1.18 reflects high provider costs, extensive benefit mandates, and a well-insured population. Massachusetts enacted its own health reform before the ACA, and the state's minimum creditable coverage (MCC) standards go beyond ACA requirements, creating additional compliance considerations for level-funded plans.

The level-funded market in Massachusetts is more constrained than in many states. While ERISA generally preempts state insurance regulation of self-funded plans, Massachusetts has taken a more aggressive stance on ensuring that level-funded arrangements don't circumvent state consumer protections. Employers considering level-funded plans in Massachusetts should work with experienced benefits counsel to navigate the regulatory landscape. The minimum group size for most level-funded carriers in Massachusetts is 5 employees.

Despite the regulatory challenges, level-funded plans can still offer meaningful savings for Massachusetts employers, particularly those with younger, healthier workforces. The state's high baseline costs mean that even modest percentage savings translate to significant dollar amounts. Blue Cross Blue Shield of Massachusetts, Harvard Pilgrim, and Tufts dominate the fully insured market, while UnitedHealthcare and Cigna are the primary level-funded options.

Frequently Asked Questions: Level-Funded Plans in Massachusetts

Is level-funded health insurance available in Massachusetts? +

Yes. Massachusetts employers have access to level-funded health plans from carriers including UnitedHealthcare Level-Funded, Cigna Level-Funded. The minimum group size is typically 5 employees. Level-funded plans in Massachusetts are treated as self-funded under ERISA, providing flexibility in plan design and potential savings.

How much can Massachusetts employers save with level-funded? +

Based on Massachusetts's average fully insured PEPM of $810 and typical level-funded discounts of 9%, employers can expect meaningful savings in the expected claims scenario. Best-case savings with surplus refunds can reach 20-30%, while worst-case exposure is capped by stop-loss insurance.

What happens if claims are higher than expected? +

Stop-loss insurance protects against catastrophic claims. Individual specific stop-loss covers any single claimant above the attachment point (e.g., $50,000). Aggregate stop-loss caps total group claims at 125% of expected. Your maximum exposure is predetermined and contractually limited.

What if claims are lower than expected? +

This is where level-funded shines. If your group's claims are below the funded amount, you receive a surplus refund. In Massachusetts, typical surplus return provisions are 35-60% of unused claims fund. With fully insured plans, the carrier keeps the difference.

Which Massachusetts employers are the best fit for level-funded? +

Level-funded plans work best for Massachusetts employers with 5-250 employees, younger-than-average workforces, and a desire for cost transparency. Industries with lower claims risk (technology, professional services, education) often see the best results. The Massachusetts market is classified as moderate for level-funded options.

Built on Real Data -- Not Guesswork

This calculator uses Massachusetts-specific actuarial data, carrier rate filings, and published survey benchmarks.

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KFF Employer Survey

2025 benchmarks from 2,000+ employers on premiums, plan design, and funding type distribution

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SOA Claims Tables

Society of Actuaries group health experience studies for expected claims modeling by age and industry

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Stop-Loss Rate Data

Sun Life and Voya reference rate schedules for specific and aggregate stop-loss pricing by attachment point

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Massachusetts DOI Filings

State-level rate filings, carrier market share data, and regulatory requirements from Massachusetts's insurance department

Want a Custom Level-Funded Quote for Massachusetts?

Get a side-by-side comparison with actual carrier quotes from UnitedHealthcare Level-Funded, Cigna Level-Funded -- reviewed by a benefits advisor who knows the Massachusetts market.

Calculation Methodology

Fully Insured Cost: Current PEPM x number of employees x 12 months. Projected forward using the annual renewal increase rate.

Level-Funded Breakdown:
- Claims Fund: PEPM x claims ratio x state cost index (1.18 for Massachusetts) x age factor x industry adjustment x plan tier multiplier. This is held in a claims account to pay medical expenses.
- Admin Fee: PEPM x admin percentage. Covers TPA fees, network access, compliance, and reporting.
- Stop-Loss Premium: Based on attachment point selected. Adjusted by Massachusetts's stop-loss factor (1.15) and group demographics.
- Total Level-Funded: Claims Fund + Admin Fee + Stop-Loss Premium.

Scenario Modeling:
- Best Case: Actual claims at 55% of expected. Employer receives ~50% of surplus (unused claims fund) as a refund.
- Expected Case: Actual claims match the expected claims fund. Typical savings vs fully insured.
- Worst Case: Claims run 130% of expected, but stop-loss caps total exposure at 125% of expected claims fund.

State Cost Index: Massachusetts's index of 1.18 adjusts base claims for state-level provider costs, utilization patterns, and regulatory environment. Based on CMS Geographic Practice Cost Index and Massachusetts DOI rate filings.

Data Sources: SOA Group Health Experience Study, Mercer National Survey 2025, KFF 2025 Employer Health Benefits Survey, TrustMark/Voya level-funded reference data, Sun Life stop-loss rate manuals, NAIC stop-loss model regulations, CMS Federal Age Rating Curves, Massachusetts Department of Insurance filings.

Massachusetts Level-Funded vs Fully InsuredSavings Calculator