Self-Funded Health Plans for 50 to 500 Employees
Self-funding can fit employers with roughly 50 to 500 employees, but the fit depends on claims stability, cash flow and risk tolerance more than on headcount.
What to know.
In a self-funded plan the employer pays claims directly and buys stop-loss coverage to limit the cost of large claims, usually with a third-party administrator handling the plan. Mid-size employers also use level-funded and partially self-funded designs that cap some of the risk.
Weigh your claims history, how steady your cash flow is, the stop-loss terms, claims run-out at the end of the contract and the state rules that apply. A good comparison puts fully insured, level-funded and self-funded side by side on the same census.
Where to look next.
Funding Options Compared
Fully insured, level-funded and self-funded side by side.
Stop-Loss and Claims Volatility
How stop-loss limits large-claim risk.
Moving to Self-Funded Step by Step
What the move involves.
Questions to answer before you move toward self-funding.
The move to self-funding is easier when the groundwork is done early. Employers typically need a clear view of recent claims, a realistic picture of cash flow in a high-claim month, an administrator they trust and a stop-loss contract they understand. Timing matters too, because quoting, underwriting and implementation take longer than a normal fully insured renewal.
It also helps to define what would make you step back. Some employers set a level of claims volatility or administrative workload they are not willing to take on. Writing that down in advance keeps the decision tied to the business instead of to a single attractive quote, and it makes the comparison against level-funded and fully insured options honest.
Common questions on this topic.
Four questions to settle before you rely on it.
Is 50 employees too small for self-funding?
Not automatically. Smaller groups often use level-funded designs. The real test is whether claims are steady enough and you can absorb some variation.
What is stop-loss?
Insurance the employer buys to cap what it pays for a single large claim or for total claims in a year.
How is level-funded different from self-funded?
Level-funded plans set a fixed monthly cost that covers claims, fees and stop-loss, and may return some surplus. A self-funded plan pays actual claims.
Does CFH help with this?
Yes. CFH compares funding options for employers and works with TPAs and stop-loss carriers on self-funded and level-funded plans.
How early should we start looking at self-funding?
Several months before the renewal date is a common starting point, since quoting, underwriting and administrator setup all take time. Starting earlier also leaves room to stay with your current arrangement if the numbers do not support a change.
What happens to claims when the plan year ends?
Claims incurred during the plan year may still be paid after it ends, which is called run-out. How the stop-loss contract and the administrator treat run-out is one of the terms to compare before you commit.
Ready? Upload your renewal, or talk it through with someone first. No cost, no obligation.
General information, not legal or tax advice. Plan-specific questions belong with your counsel or CPA, and we will bring them in.
Related guides.
Choosing a TPA
Select a third-party administrator for a self-funded plan.
Level-Funded vs Fully Insured
The middle-ground option.
Compliance Services
How CFH supports the compliance side of your plans.
Where the Rules Come From.
The laws and rules named on this page link to the statute or regulation they come from. This is general information, not legal or tax advice, and rules change, so check the current text.
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.
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