Self-Funded and Level-Funded Health Plans That Put Employers in Control

For businesses ready to move beyond off-the-shelf group health insurance, self-funded and level-funded plans offer a smarter path — one where your company's actual claims experience drives costs, not a carrier's broad assumptions about your industry.

What Separates Self-Funded and Level-Funded Plans from Traditional Coverage

With a fully insured group health plan, your company pays a fixed premium regardless of how much your employees actually use their benefits. The carrier keeps the difference in a good year and raises your rates when claims run high. Self-funded and level-funded plans shift that dynamic in your favor.

 

In a self-funded arrangement, your company assumes direct financial responsibility for employee claims up to a defined threshold. Stop-loss coverage sits above that threshold, capping your exposure in the event of a catastrophic or unexpectedly high-claims year. What you save on carrier margin and profit loading stays with your business.

 

Level-funded plans follow a similar structure but add a layer of predictability: you pay a fixed monthly amount that covers expected claims, stop-loss insurance, and administration. If your claims come in below projections, you receive a surplus refund at year end. It is the cost-control logic of self-insurance with the cash flow consistency that many mid-market employers need.

 

Key distinctions between the two structures:

 

  • Self-funded plans give employers maximum flexibility and direct access to claims data, but require comfort with variable monthly claim costs
  • Level-funded plans cap monthly outlay at a predictable figure while still offering refund potential and data transparency
  • Stop-loss coverage is a standard component of both structures, protecting employers against individual high-cost claimants and aggregate claim spikes
  • Plan design flexibility is significantly greater under both models than under fully insured arrangements — employers can tailor networks, benefit tiers, and cost-sharing structures
  • Claims data ownership allows employers to make informed, evidence-based decisions about plan design each renewal cycle

Is Self-Funded or Level-Funded Insurance the Right Fit for Your Company?

The question of whether a self-insured group health plan makes sense depends on several factors specific to your workforce and financial position. These structures are not exclusively the domain of large corporations — level-funded plans in particular have become a viable and increasingly common option for employers with as few as 10 to 25 employees. Employers who tend to benefit most share a few common characteristics. They have a relatively stable workforce with predictable turnover. They are paying more at renewal than their actual claims history would justify. They want visibility into where their health spend is going rather than receiving an opaque rate increase each year. And they are willing to engage with their broker as an active partner in plan strategy, not just a policy administrator.

 

Employers for whom a fully insured plan remains the better choice typically have a very small group, significant workforce volatility, or a recent history of high claims that would make stop-loss pricing prohibitive. The right answer is always specific to your situation, which is why a thorough cost modeling conversation should precede any structure change.

 

MJM Global works with employers across the spectrum — from small businesses exploring level-funded plans for the first time to mid-market companies managing established self-funded programs — and we bring the same independent, carrier-agnostic perspective to every engagement.

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What to Expect When You Work With MJM Global on a Self-Funded or Level-Funded Plan

Our process begins with a thorough review of your current plan economics, claims history, and workforce demographics to determine whether a self-funded or level-funded structure would produce meaningful savings or greater value. From there, we approach multiple stop-loss carriers on your behalf, coordinate TPA selection, and model realistic and stress-tested scenarios so you can make a fully informed decision before committing to any change. We remain actively engaged throughout the plan year — monitoring claims performance, managing vendor relationships, and preparing a data-driven renewal analysis well in advance of each cycle.

Frequently Asked Questions About Self-Funded and Level-Funded Health Plans

  • What is a level-funded health plan?

    A level-funded health plan is a form of self-insurance structured to give employers predictable monthly costs. Your company pays a fixed amount each month that covers projected claims, stop-loss insurance, and plan administration. If actual claims come in below the projection at year end, you receive a refund of the surplus. It combines the cost-control potential of self-funding with the cash flow consistency of a fully insured premium.

  • Is self-funded insurance right for my company size?

    Self-funded arrangements have historically been most common among large employers, but level-funded plans have made this structure accessible to groups as small as 10 to 25 employees. Whether it makes sense for your company depends on your claims history, workforce stability, and financial position — factors we assess together before making any recommendation.

  • What is stop-loss coverage and why does it matter?

    Stop-loss coverage is the insurance that protects a self-funded employer from unexpectedly high claims. Specific stop-loss covers individual claimants whose costs exceed a defined threshold. Aggregate stop-loss caps your total plan liability for the year if overall claims exceed projections. Together, these two layers define and limit your financial exposure, which is what makes self-funding manageable for employers who are not large enough to absorb catastrophic claims on their own.

  • What data will we have access to under a self-funded plan?

    One of the most significant advantages of self-funding is direct access to your own claims data. Unlike fully insured plans where the carrier owns that information, a self-funded arrangement gives your company visibility into utilization patterns, high-cost conditions, and cost drivers — information that allows for evidence-based plan design decisions at each renewal rather than reactive responses to carrier rate increases.

  • How does MJM Global get compensated on self-funded programs?

    We are compensated through broker fees or commissions depending on the program structure, and we disclose our compensation clearly at the outset of any engagement. Because we are independently owned and not aligned with any single carrier, TPA, or vendor, our recommendations are not influenced by production arrangements or preferred partner agreements. Our interest is in building a program that performs well for your company over time.