New Jersey Level-Funded vs Fully Insured
Savings Calculator
Compare level-funded and fully insured health plan costs for your New Jersey business. See potential savings, surplus refunds, and worst-case scenarios -- powered by New Jersey-specific carrier data and actuarial benchmarks.
New Jersey Level-Funded Market at a Glance
Frequently Asked Questions: Level-Funded Plans in New Jersey
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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 (1.15 for New Jersey) 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 New Jersey'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: New Jersey's index of 1.15 adjusts base claims for state-level provider costs, utilization patterns, and regulatory environment. Based on CMS Geographic Practice Cost Index and New Jersey 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, New Jersey Department of Insurance filings.
Level-Funded Health Insurance in New Jersey: What Employers Need to Know
New Jersey is one of the most heavily regulated and expensive health insurance states, with a cost index of 1.15 and extensive state-specific benefit mandates. The state's regulatory environment has historically scrutinized level-funded arrangements to ensure they provide adequate consumer protections. New Jersey employers considering level-funded plans should work with experienced benefits counsel to navigate the state's complex regulatory landscape.
New Jersey has one of the most comprehensive lists of state-mandated health benefits in the country, including IVF coverage, mammography density notification, and dozens of other requirements. Level-funded plans under ERISA may be exempt from many of these mandates, which can create significant cost savings -- the mandate differential alone can account for 5-10% of premium costs. However, New Jersey regulators have been increasingly focused on ensuring that level-funded plans don't circumvent consumer protections.
Horizon Blue Cross Blue Shield dominates the New Jersey fully insured market, while UnitedHealthcare, Cigna, and Aetna provide the primary level-funded alternatives. Despite the regulatory challenges, level-funded plans have grown in popularity among New Jersey employers because the high baseline fully insured costs create a large potential savings gap. New Jersey employers should ensure their level-funded arrangements include robust stop-loss protection given the state's high cost environment.