Fully insured, level funded or self funded: the answer is in your claims, not the brochure.
We price all three arrangements side by side on your own census and claims history, over more than one year, and we include the scenario where the bad year arrives first. Sometimes the answer is to stay exactly where you are, and we say so.
Four numbers decide the comparison. Premium is not one of them.
A fully insured premium bundles claims, risk charge and profit into one figure. A level-funded or self-funded quote splits them apart. We put every option on the same footing before anyone compares a price.
Fixed Costs vs. the Claims Fund
Administration, stop-loss premium, network access and pharmacy fees are fixed. The claims fund is what you expect to spend. We separate the two on every quote, because only the fixed side is negotiable and only the claims side can come back to you.
The Most You Can Pay
Fixed costs plus the aggregate attachment point is your worst year. We show that number next to the fully insured premium, so the downside is a figure you have seen, not a clause you discover. For a level-funded or self-funded plan, that worst-case figure is the number to budget against.
The Year After
A good first year is where level funding looks best. We model the renewal that follows a bad year too: how the claims fund, the stop-loss rate and any new lasers reprice when the carrier has seen your experience. That second-year renewal is where a level-funded decision is really won or lost.
Cash Flow and Run-Out
Self funding pays claims as they are paid, not in even installments, and claims keep arriving for months after a plan ends. We map the monthly cash position and the run-out liability before you commit, not after. Run-out is the part of a self-funded budget that is easiest to leave out.
Leaving the small group market means leaving its rating rules.
Fully insured small group plans are community rated: the carrier may price on age, location, tobacco use and family size, but not on anyone’s health. Level-funded and self-funded plans are underwritten on your group’s actual health.
Why It Helps a Healthy Group
A young, low-claim group subsidizes the community pool inside a fully insured plan. Underwritten on its own experience, it stops paying for everyone else’s claims, which is where most first-year level-funding savings come from. That same health is what a level-funded quote is priced on, so it is also what can change at renewal.
Why It Hurts a Group with Claims
A group with one serious ongoing condition gets the opposite result: a higher claims fund, a laser, or a declined quote. For that group the community-rated plan is the protection, and moving off it is the mistake. Knowing which of these groups you are is the first question in any funding model analysis.
What Coming Back Costs
A small group can return to the community-rated market without anyone's health being priced. What the return costs is timing: claims incurred in the self-funded year keep arriving for months and still have to be paid. We model the way back before the way out.
The better the data, the less the answer depends on a carrier’s assumptions.
We work with what you have. A small group rarely has claims data; a larger one usually does and rarely gets asked for it properly.
Every Group
Current census, plan designs, contribution strategy and the renewal. That is enough for a first read on whether an underwritten option is worth the effort of applying. It also shows whether a level-funded or self-funded quote is likely to beat your fully insured renewal before anyone fills out an application.
Smaller Groups
Level-funded carriers underwrite smaller groups on employee health questionnaires. We tell you before the applications go out what a questionnaire is likely to surface and whether it is worth running. Accurate answers matter, because the level-funded rate is set on what the questionnaires disclose.
Larger Groups
Monthly paid claims, large-claimant reports and pharmacy data, ideally for two or more years. With those we price your own trend, not an industry average, and test the result against the renewal. Two years of claims data is what lets a self-funded projection stand on your own experience.
What employers ask before they change funding.
Is level funding just self funding with training wheels?
Close. It is self funding up to an attachment point, with the cash flow smoothed into monthly installments and stop-loss above. The protection is real; so is the underwriting that decides what you pay for it. It is often how a smaller employer takes its first step into self-funding.
What if we have one large claimant?
That claimant sets the price of every underwritten option, usually through a laser. We quantify it both ways before you apply, and in many cases the fully insured plan wins until the claim resolves. A laser is a separate, higher stop-loss deductible on that one person.
Is there a middle path?
For mid-size employers, a group captive shares a layer of risk with other employers while you keep the self-funded structure. It fits fewer groups than it is pitched to, which is why we evaluate it on its own. Captive fit depends on group size, claims stability and appetite for shared risk.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
An independent employee benefits consulting firm. We look at the entire benefits program — cost, plan performance, risk and administration.
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