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 — Founder & Licensed Benefits Advisor

Published February 5, 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

Founder & Licensed Benefits Advisor · Vantage Pointe Consulting · Southwest Florida

Roger Aboytes is a licensed employee benefits advisor serving small and mid-size businesses across Southwest Florida. He specializes in group health insurance, level-funded plans, and Section 125 strategies that help employers reduce costs without cutting coverage. Roger holds a Florida insurance license and works directly with business owners in Cape Coral, Fort Myers, Naples, and Bonita Springs.

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