Are you a small business owner looking for an affordable and flexible health insurance option? Look no further! 


In today’s blog post, we are going to dive into the world of level funded health insurance and explore its incredible benefits for small businesses. Whether you’re struggling with rising healthcare costs or searching for ways to attract top talent, level funded health insurance has got your back. Get ready to discover a game-changing solution that will revolutionize your company’s healthcare coverage. Let’s get started!

How It Differs From Traditional Health Insurance Plans

Level funded health insurance is gaining popularity among small businesses as an alternative to traditional health insurance plans. While both options offer coverage for medical expenses, there are some key differences that set level funded plans apart from their traditional counterparts.


One of the main differences between level funded and traditional health insurance plans is the way they are priced. Traditional plans typically involve fixed premiums that are paid by the employer and employees on a monthly basis. These premiums are determined based on the risk profile of the group, meaning that healthier groups pay lower premiums while those with higher risk factors pay more.


Another key difference between these two types of health insurance plans is in terms of risk sharing. In traditional plans, all members within a group share the same risk pool regardless of their individual health status or utilization rates. This can result in higher premiums for healthier individuals who may not require as much medical care.


In contrast, level funded plans allow employers to customize their risk pools based on their employees’ individual health profiles and usage patterns. This can lead to lower costs for healthy individuals as they will not be subsidizing high-risk members within their group.


Another advantage of level funded health insurance is its potential for cost savings through stop-loss insurance. This additional coverage protects employers against unexpected and catastrophic claims, providing a safety net for their budget and mitigating risk.


Level funded health insurance offers small businesses a more flexible, cost-effective and customizable alternative to traditional plans. By understanding the key differences between these two options, employers can make an informed decision about which type of plan best suits their needs and the needs of their employees.

Advantages For Small Businesses

  1. Cost Savings:One of the major advantages of level funded health insurance for small businesses is cost savings. Unlike traditional fully-insured plans, level funded plans allow businesses to pay a fixed monthly amount based on their employees’ expected healthcare costs. This means that if your employees have low claims in a particular month, you will not have to pay high premiums as you would with traditional plans. Additionally, any unused funds at the end of the year can be returned to the employer or rolled over into the next year’s plan, providing even more cost savings.


  1. Customization:Level funded plans offer more flexibility and customization options compared to fully-insured plans. Employers have the ability to tailor their health insurance benefits based on their specific needs and budget. This includes choosing from multiple coverage options such as deductibles, co-pays, and coinsurance rates.


  1. Reduced Administrative Burden:With level funded health insurance, employers do not have to deal with unexpected rate increases or complex claims processing procedures typically associated with fully-insured plans. The insurance carrier takes care of all administrative tasks including processing claims and managing provider networks, allowing employers to focus on running their business.


  1. Financial Protection:Level funded health insurance provides financial protection for both employers and employees in case of catastrophic events or high healthcare costs for individual employees. With stop-loss coverage included in most level funded plans, employers are protected from large medical expenses that exceed their expected healthcare costs.


  1. Employee Retention:Offering competitive benefits such as a comprehensive healthcare plan is essential for attracting and retaining top talent in today’s job market. With level funded health insurance plans being more affordable than traditional fully-insured plans, small businesses can provide attractive benefits without breaking their budget.

Cost Savings And Predictability

Level funded health insurance offers unique cost savings opportunities for small businesses, as well as providing a predictable budget for healthcare expenses. This innovative approach combines the benefits of self-funded and fully insured plans, making it an attractive option for companies with 50 or fewer employees.


One of the main advantages of level funded health insurance is that it allows small businesses to potentially save money on their healthcare costs. With traditional fully insured plans, employers pay a fixed premium each month based on the number of employees enrolled in the plan. However, with level funding, employers only pay for actual claims incurred by their employees. This means that if there are few claims made in a given month, the employer will not have to pay as much as they would with a traditional plan.


Another way in which level funded plans can lead to cost savings is through stop-loss insurance. This is a type of coverage that protects employers from catastrophic losses due to high-cost claims. In a level funded plan, stop-loss insurance typically kicks in once total claims exceed a certain threshold set by the employer. This means that if an employee has an unexpectedly expensive medical procedure, the employer’s costs are limited and they won’t have to bear the full burden of the expense.


In addition to potential cost savings, level funded health insurance offers predictability when it comes to budgeting for healthcare expenses. With fully insured plans, premiums can fluctuate significantly from year to year based on factors such as age demographics and overall health status of employees. This makes it difficult for small businesses to accurately budget for healthcare expenses.


On the other hand, level funded plans provide more stability in terms of monthly costs since employers only pay for actual claims incurred by their employees rather than a fixed premium amount. Employers also have greater control over their spending through various cost-containment measures such as wellness programs and utilization review processes.


Level funded health insurance is an attractive option for small businesses looking to save money on healthcare expenses while also having predictability in their budgeting. With potential cost savings through actual claims payments and stop-loss insurance, as well as greater control over plan design and administrative costs, it’s no wonder that this approach is gaining popularity among small business owners.

Case Study: A Small Business’s Success With Level Funded Health Insurance


In recent years, small businesses have faced numerous challenges when it comes to offering competitive health insurance benefits to their employees. Rising healthcare costs and limited resources have made it difficult for these businesses to provide comprehensive coverage without breaking the bank. However, one small business in particular has found success with an innovative solution – level funded health insurance.


ABC Company, a family-owned business with many employees, had been struggling to find affordable health insurance options for their staff. As a relatively small company, they were unable to negotiate lower rates or secure group discounts from insurance providers. This meant that traditional fully-insured plans were simply too expensive and unsustainable for their budget.


The results for Company were astounding. Not only did they save up to 20% on their overall healthcare costs compared to their previous fully-insured plan, but they also saw improvements in employee satisfaction and retention rates.


One major factor contributing to this success was the flexibility of level funded plans. Unlike traditional fully-insured plans which have strict benefit packages set by the insurer, level funded plans allow employers to customize their benefits according to what works best for their employees’ needs and budget constraints.


For ABC Company, this meant being able to offer more comprehensive coverage such as dental and vision care at no additional cost. It also allowed them to design wellness programs that incentivized healthy living among employees.


It’s safe to say that ABC Company’s switch to level funded health insurance has been a game-changer for their small business. Not only did they save on costs, but they also improved employee satisfaction and retention rates – a win-win situation for both employer and employees. This case study serves as a testament to the benefits of level funded health insurance for small businesses looking for sustainable and affordable healthcare solutions.



Level funded health insurance provides small businesses with numerous benefits such as cost savings, flexibility, and control over healthcare options. It allows employers to offer competitive benefits packages to attract and retain top talent while also providing employees with comprehensive coverage. 


By considering level funded plans for their business, small business owners can take advantage of these benefits and ensure the well-being of their employees without breaking the bank. With the constantly changing landscape of healthcare, level funding offers a stable and sustainable solution for small businesses looking to provide quality health insurance for their employees.