A claims fund, a stop-loss layer, and year-end reconciliation, billed as a fixed monthly amount. This page covers the mechanics, the State Corporation Commission Bureau of Insurance stop-loss rules that apply, and the Virginia employer profiles that typically qualify.
The three monthly buckets, the year-end reconciliation, and the Virginia stop-loss rules that frame every level-funded plan.
What the structure does. The employer pays a fixed monthly amount divided into three buckets: (1) the claims fund (held in a stop-loss-protected account and used to pay actual claims), (2) administrative fees to the TPA / carrier, and (3) the stop-loss premium that caps both individual-claim and aggregate-claim exposure. At year-end, claims spend is reconciled against the funded amount; if claims ran below the funded level, the employer receives a partial refund or credit applied to renewal.
How it lands in Virginia. In Virginia, level-funded arrangements are layered with stop-loss policies regulated by the State Corporation Commission Bureau of Insurance. Level-funded products sit outside the fully insured small-group risk pool and outside Virginia's Insurance Marketplace's rating bands. Employers in Northern Virginia, Richmond, and Hampton Roads who run lean claims (often in the federal government / defense contracting (Northern Virginia, Pentagon corridor), healthcare systems, and shipbuilding & maritime (Hampton Roads) sectors) use level-funded as a stepping stone between fully insured and self-funded. Virginia's ~6.9% uninsured rate keeps mid-market enrollment steady, which supports the actuarial profile underwriters look for.
The regulatory boundary. Level-funded plans are technically self-funded under ERISA, so they require a wrap document, HIPAA privacy controls, and compliance with the host state's stop-loss laws and minimum attachment-point rules. The level-funded structure is technically ERISA self-funded; the State Corporation Commission Bureau of Insurance reviews only the stop-loss layer.
Level-funded plans usually attract a specific kind of mid-market Virginia employer. Here is the profile.
Typical buyer profile. Typically fits employers in the 25 to 150 employee range with a healthier-than-average census, an HR or finance lead who wants claims-level visibility, and a 12-month tolerance for the back-end reconciliation. Common landing point for growing professional-services, light-industrial, and technology employers.
Virginia employer clusters. In Virginia, level-funded products are common among growing federal government / defense contracting (Northern Virginia, Pentagon corridor), healthcare systems, and shipbuilding & maritime (Hampton Roads) employers in the 25 to 150 employee band, where the underwriter is comfortable with the census but the employer wants stronger claims-data visibility. The largest concentrations are in Northern Virginia, Richmond, and Hampton Roads.
How Virginia policy context interacts. Virginia expanded Medicaid in 2019 under §32.1-325.04, enacted by a bipartisan General Assembly majority — the only Southern state outside the traditional expansion belt to expand through direct legislative action (rather than a ballot referendum), and the last major Medicaid expansion before the COVID pandemic. For level funded buyers, this affects which employees move between the employer plan and Cardinal Care, which in turn shapes the underwriting profile that carriers and TPAs price against.
Typical tradeoffs. Cash-flow stability of a fixed monthly bill plus year-end reconciliation upside, traded against underwriting that re-prices annually with experience and stop-loss lasers on high-cost members.
The three monthly buckets, stop-loss attachment, and how level-funded sits relative to fully insured.
Twelve short questions return a fit grade across all seven funding arrangements, with level-funded benchmarked against your current plan.
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