How does a level-funded health plan work?

A level-funded plan charges a fixed monthly amount that covers expected claims, stop-loss insurance, and administration. If actual claims come in below projections at year-end, the employer receives a surplus refund — typically 50-100% of the unused claims fund.

What is stop-loss insurance in a level-funded plan?

Stop-loss insurance protects the employer from catastrophic claims. If a single employee's claims exceed a set threshold (typically $20,000-$50,000), the stop-loss carrier covers the excess, capping the employer's risk.

Who qualifies for a level-funded health plan in Florida?

Most Florida businesses with 5 or more employees can qualify for level-funded plans. Underwriting is based on the group's health history, but many groups that have been declined for self-funded plans can still qualify for level-funded coverage.

What happens if claims exceed the level-funded amount?

Stop-loss insurance covers individual claims above the specific deductible. Aggregate stop-loss coverage protects against total claims exceeding the annual expected amount. The employer's monthly payment stays the same regardless of claims.

How is a level-funded plan different from a fully-insured plan?

With a fully-insured plan, the carrier keeps all surplus and you never see your claims data. With a level-funded plan, you own your claims data, can receive surplus refunds, and pay lower administrative fees — typically saving 20-40% over fully-insured coverage.

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Alternative Funding

Level-Funded Plans: How They Work and Why They Matter

By Roger Aboytes — Licensed Benefits Consultant

Published February 4, 2026 · Last updated July 29, 2026

Level-funded plans represent a middle ground between fully insured and self-funded arrangements. You pay a fixed monthly premium including projected claims, administrative fees, and stop-loss insurance. If actual claims are lower, you get a refund. This model offers predictability, upside potential, and control.

Roger Aboytes

Licensed Benefits Consultant · Vantage Pointe Consulting · Southwest Florida

Roger Aboytes is a licensed independent benefits consultant serving individuals, families, and businesses across Southwest Florida. He helps clients compare health coverage options and design employee benefits strategies that fit their needs. Roger works directly with clients in Cape Coral, Fort Myers, Naples, Bonita Springs, and surrounding communities.

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