✓ Reviewed and updated for the current plan year
Staring down another 15–20% renewal increase? You're not alone ... medical premiums are what's crushing California small employers right now, and a fully insured plan hands a healthy group nothing back when claims stay low. Level funding is the move a lot of employers are making to fight back: the predictability of a fixed monthly payment, plus the chance to get money back when your team's claims run low.
Here's how it works, who it fits, and how we shop it across carriers for you.
Level funding is a type of self-funded health plan packaged to feel like a traditional one. Instead of paying a carrier a fixed premium to take all the risk, your business funds its own employees' claims up to a capped amount ... with insurance protecting you above that. It comes in three parts:
Your company funds its employees' covered medical and pharmacy claims, instead of paying a carrier to take the risk.
A carrier or administrator runs the plan day to day ... claims, billing, ID cards, member service, and the provider network. Employees barely notice a difference.
Caps your risk. It covers claims above an expected level ... both a big individual claim and a high-claims year overall ... so your exposure is limited.
You pay one fixed monthly amount that bundles all three. That number is your maximum cost for covered claims for the year.
Your fixed monthly payment is your maximum liability for covered claims ... even in a bad year you won't be billed more, because stop-loss covers the overage.
In a good year, if your group's medical and pharmacy claims come in under what was funded, you may receive a surplus refund at year-end (where allowed by law). A fully insured carrier simply keeps that money.
Locked for the year. Your monthly payment is set at the start of the plan year and stays flat ... it does not rise mid-year if claims spike. It all settles up at renewal, when a healthy year can return a surplus and the carrier sets next year's rate based on your group.
*Surplus refunds are available only where allowed by law. Please consult your tax or legal advisor.
Level funding doesn't save money by magic ... it changes who carries the risk and who keeps the upside. The levers that drive savings:
What employers are actually saving ... the carriers' own numbers:
Actual savings depend entirely on your group's size, health, and claims ... there's no one-size number. That's exactly why we quote level funded and fully insured side by side, so you see real figures for your team.
This is where an independent agent earns their keep. Level-funded products differ a lot by carrier ... underwriting appetite, stop-loss terms, networks, surplus rules, and price all vary. We're independent, so we quote your group across the major carriers' level-funded plans and against a fully insured plan, then hand you the real numbers. You get the best fit without doing the legwork, and there's no cost for our help.
| Carrier we shop | Their level-funded product |
|---|---|
| UnitedHealthcare | Level Funded & Surest Level Funded |
| Anthem Blue Cross | Level-funded plans |
| Aetna | Aetna Funding Advantage |
| Cigna | Cigna Level Funding |
Availability and group-size rules vary by carrier, county, and plan year. We confirm what's actually available for your group ... and whether fully insured still beats it.
Groups of roughly 5–100 employees (as few as 2 in some markets); relatively healthy teams that underwrite well; and employers tired of absorbing the full ACA increase every single year and wanting real claims data and control.
Groups with significant known high-cost claims may underwrite less favorably, and some owners simply prefer the hands-off simplicity of fully insured. That's exactly why we quote both ... so you decide with real numbers, not a guess.
Level funding shines for a particular kind of group. The closer you are to this profile, the bigger the potential win:
Not a perfect match on every line? Still worth a look ... underwriting appetite varies by carrier, and we quote several to find the best answer for your exact group.
Level funding isn't the answer for every group ... and we'd rather tell you that than force it. If it's not your best move, here are the other ways California employers are controlling cost. We're independent, so we can set up whichever one fits.
The traditional route ... a carrier takes all the risk for a fixed premium. Simple, predictable, and often the right call for smaller or higher-risk groups. See the full comparison.
An Individual Coverage HRA lets you skip the group plan and give employees a tax-free monthly allowance to buy their own individual or Covered California plan. Any size company, you set the budget, employees pick what fits them.
A Qualified Small Employer HRA is for businesses under 50 employees with no group plan. You reimburse employees tax-free, up to annual IRS limits, for individual coverage and medical expenses ... a simple way to help without running a group plan.
One heads-up: an ICHRA or QSEHRA can affect an employee's Covered California subsidy, so the math matters. We walk through the trade-offs with you before anything is set up.
Getting level-funded numbers is quick. To shop it for your group, we typically need:
Send it over and we'll come back with level-funded and fully insured options side by side. Prefer the head-to-head first? See Level Funded vs. Fully Insured.