Level-funded and self-funded health plans can give an employer more visibility into claims and funding, but they also change who bears risk and who owns important administrative responsibilities. Compare the complete contract—not only the illustrated monthly payment or best-case refund.
Separate insurance from plan funding
In a fully insured plan, the employer pays a fixed carrier premium. In a self-funded arrangement, the employer funds covered claims and typically hires a third-party administrator. A level-funded arrangement generally combines a fixed monthly funding amount with claims funding, administrative charges, and stop-loss protection.
Understand stop-loss protection
Stop-loss insurance can reimburse eligible claims above specific or aggregate attachment points, but it does not convert the employer plan into a fully insured health policy. Review exclusions, reimbursement timing, run-out claims, lasers, renewal terms, and the employer liability below each attachment point.
Model the full financial range
Compare the expected payment with the maximum contractual liability, administrative and network fees, pharmacy arrangements, claim-funding timing, reserves, potential surplus treatment, and what happens after termination. A projected refund is not guaranteed savings.
Assign compliance and reporting ownership
Self-insured employers can have coverage-reporting and plan-administration responsibilities that differ from fully insured groups. Confirm Form 1094/1095 reporting, ERISA documents, COBRA or state continuation, required notices, claims appeals, privacy, and fiduciary roles with the administrator and qualified legal, tax, and benefits advisers.