---
title: "Level-Funded Insurance: the Ins, Outs, and Everything In-Between"
description: Discover the advantages of level-funded insurance, including cost savings, transparency, and predictability, along with insights on who benefits most from it.
---

[Employee Benefits Blog ](https://www.blueridgeriskpartners.com/employee-benefits-blog)

# [Level-Funded Insurance: the Ins, Outs, and Everything In-Between](https://www.blueridgeriskpartners.com/employee-benefits-blog/blog/level-funded-insurance-the-ins-outs-and-everything-in-between)

 Written by [Tia Viglianco](https://www.blueridgeriskpartners.com/employee-benefits-blog/author/tia-viglianco) | May 7, 2026 5:19:14 PM

There are [three types of group health plans](https://www.blueridgeriskpartners.com/blog/eb-types-of-health-plans) that most employers use: [self-funded](https://www.blueridgeriskpartners.com/blog/all-about-self-funded-insurance),[ level-funded](https://www.blueridgeriskpartners.com/blog/level-funded-insurance-the-ins-outs-and-everything-in-between), and fully-insured. Though self-funded and fully-insured descriptions match their names, what in the world is a level-funded insurance plan?  In this blog, we’ll tell you what you need to know about level-funded insurance.  

 

## **What does it mean to be “level-funded?”** 

A level-funded plan is a good blend between self-funded and fully-insured. The employer pays a monthly fee to cover administration, claims, and stop-loss costs, but this fee isn’t as high as one for a fully-insured plan. This makes it easier for employers to offer health benefits to their employees at a more affordable price.   

The monthly fee is not directly paid to the insurance carrier; it is split between the aforementioned administration costs, claims payments, and stop-loss insurance.  The employer is able to see these divisions and how the money is being used.  

 

### **What are administration costs?** 

This refers to the fee you’d pay a third-party administrator who provides their service by managing the plans like paying claims, providing customer service, and doing other designated tasks. 

 

### **Claims payments?** 

This portion of the funds involves managing the money within the claims account. 

 

### **What about stop-loss insurance?** 

Stop-loss insurance helps to reimburse an employer if their claims go over a pre-specified amount. It’s useful because it protects you against catastrophic claims, where the cost is higher than expected.  

You can read more here: [Understanding Stop-Loss Insurance](https://www.blueridgeriskpartners.com/business-insurance-blog/understanding-stop-loss-insurance-blue-ridge-risk-partners). 

 

## **Why should I go with level-funded insurance?** 

Common reasons to choose a level-funded plan include: 

- Opportunity for Savings: If your employees are pretty healthy and you don’t have to pay many claims, your costs will be lower than if you had a fully-insured plan. A portion of the difference between the anticipated and actual claims will be refunded to you.  
- Control & Transparency: You can see where your money is being allocated and designate certain amounts. 
- Predictability: You have a general idea of how much you’ll pay each month, with the fixed monthly fee.  

 

## **Are there any downsides to level-funded insurance?** 

- Cost: If your employees are relatively healthy, a level-funded plan may be more costly than a self-funded one. Also, if your employees experience more claims than expected, there may be significant increases to the monthly fee the next time. 

## **Who generally has a level-funded plan?** 

Small groups with healthy individuals tend to save the most with a level-funded plan. Older groups or groups with many high-risk individuals (those who take lots of prescriptions or with frequent doctor's visits) should consider a fully-insured plan, as costs might be high with a level-funded or [self-funded plan](https://www.blueridgeriskpartners.com/blog/all-about-self-funded-insurance).  

 

## **I still have questions. What should I do? ** 

We’re here to help. If you want to know more, check out some more of our blogs: [Self Funded vs Fully Insured vs Level Funded Plans | Blue Ridge Risk Partners,](https://www.blueridgeriskpartners.com/blog/eb-types-of-health-plans) [All About Self-Funded Insurance](https://www.blueridgeriskpartners.com/blog/all-about-self-funded-insurance), What to Know About Fully-Insured Insurance, or [Understanding Stop-Loss Insurance](https://www.blueridgeriskpartners.com/business-insurance-blog/understanding-stop-loss-insurance-blue-ridge-risk-partners).  

 

[Contact us](https://www.blueridgeriskpartners.com/contact-us)!  We’ll get you the right information to help you on your insurance journey.

[View full post](https://www.blueridgeriskpartners.com/employee-benefits-blog/blog/level-funded-insurance-the-ins-outs-and-everything-in-between)

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