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January 2024

Next Level Benefits: The Value of Level-Funded Health Insurance for Small Businesses

For health insurance brokers looking to provide optimal solutions for their small business clients, understanding the unique advantages of level-funded health insurance is crucial.

In the dynamic landscape of employee health insurance benefits, small businesses often find themselves navigating a maze of unappealing options, trying to strike the right balance between cost and comprehensive coverage. Level-funded health plans stand out as a compelling option that combines the best of both worlds. For health insurance brokers looking to provide optimal solutions for their small business clients, understanding the unique advantages of level-funded planshealth insurance is crucial.

What is a Level-Funded Health Plan?

In essence, a level-funded health plan is a hybrid between a traditional fully-insured plan and a self-funded plan. It is designed to cater specifically to the needs of small businesses, offering a middle ground that provides the financial predictability of a fully-insured plan with the cost savings opportunities of a self-funded plan.

Predictability in Budgeting

One of the primary benefits that level-funded health plans bring to the table is predictability in budgeting. Unlike traditional fully-insured plans where premiums are fixed and often subject to annual increases, level-funded plans provide a more stable financial outlook for businesses. These plans typically involve a fixed monthly cost, which includes a predetermined amount for claims and a margin for administrative expenses.

Return of Premiums

One of the most enticing features of level-funded plans is the potential for reimbursement for payments in excess of claims incurred. In years where claims are lower than expected, businesses may receive a portion of their premiums back As you assess a level-funded plan administrator, it’s important to understand its approach to refunds or reimbursement options and how that compares to competitors. This added financial incentive encourages a focus on preventive health measures and overall employee well-being.

Risk Mitigation and Stop-Loss Coverage

 While embracing level-funded plans introduces a calculated element of risk, the strategic integration of stop-loss coverage serves as a robust financial safeguard. Activating when claims surpass a predefined threshold, stop-loss coverage effectively shields businesses from potential financial strain. This blend of risk mitigation and financial protection empowers small businesses to embrace self-funding with confidence, assuring prudent fiscal management and resilience against undue liabilities.

Enhanced Transparency

 Level-funded plans prioritize transparency, providing businesses with a clear overview of their health care spend. This heightened transparency facilitates collaborative efforts between businesses and administrators in effectively managing healthcare costs. Such clarity empowers CFOs with a strategic tool to optimize financial resources and make informed decisions in steering healthcare expenditures.


The value of level-funded health plans for small businesses lies in the fusion of stability, opportunity for savings and transparency. Level-funded plans offer small businesses a solution that not only meets their unique needs but also provides a pathway to long-term financial health. By unlocking the potential of level-funded plans, you empower small business to navigate the complexities of health insurance with confidence and resilience. Still have questions? Check out these Level-Funding FAQs.