Guide
Level-funded health plans for Middle Tennessee employers.
Level funding has become a common option for employers with roughly 20 to a few hundred employees. It can cost less than a fully insured plan. It also comes with terms that are easy to miss until the first renewal.
Basics
How it works, in plain terms
- A fixed monthly payment
- You pay the same amount every month, like a fully insured premium. That keeps budgeting simple.
- Part of it pays claims
- The payment covers admin fees and stop-loss insurance, and the rest goes into a fund that pays your employees' claims.
- Stop-loss caps the risk
- If one large claim or total claims for the year run high, stop-loss insurance pays the excess, so your monthly cost doesn't change mid-year.
- A possible refund
- If claims come in under the fund, you may get part of the surplus back. How much, and when, depends entirely on the contract.
Fit
When it tends to make sense
- Your group's claims have been steady, without a run of large claims.
- You're paying fully insured rates that reflect the market more than your own employees.
- You can handle a renewal that moves with your claims, up as well as down.
- You want to see claims reporting that fully insured plans usually don't provide.
Fine print
What to read before you sign
- Surplus terms
- What share of a surplus comes back to you, when it's paid, and whether you forfeit it if you leave.
- Leaving the plan
- What happens to claims that arrive after the contract ends, and who pays them.
- Renewal caps
- Whether the carrier limits how much the rate can rise after a bad year, or can decline to renew.
- Underwriting
- What the carrier asked about your group to set the rate, and what happens if your workforce changes.
How I help
Comparing it honestly
I price level funding next to a fully insured plan for the same group, using your own claims where they're available, and show what each would cost in a good year and a bad one.
The sample teardown walks through a level-funded renewal step by step.
Next
Wondering if level funding fits your group?
Twenty minutes is enough to tell you whether it's worth pricing out.