Level-funded health plans are a hybrid between fully-insured and self-funded coverage. The Florida small business pays a fixed monthly amount (like fully-insured) but the components are unbundled: an admin fee, a stop-loss insurance premium, and a 'claims fund' set aside to pay actual employee claims. If actual claims come in below the funded amount, the business gets a year-end refund (typically 30-60% of the unused claims fund). If claims exceed expectations, stop-loss kicks in to cap the employer's liability. Level-funded plans require medical underwriting and best fit Florida small businesses with healthier-than-average demographics.
| Monthly Payment Component | What It Covers |
|---|---|
| Admin fee | TPA processing claims, ID cards, network access |
| Stop-loss premium | Insurance protecting employer if claims exceed cap |
| Expected claims fund | Money set aside to pay actual employee claims |
| Total monthly | Fixed for the policy year |
At year-end, the carrier reconciles actual claims paid vs the funded claims account. Excess (claims under expectation) returns to the employer in part. Shortage (claims over expectation) is covered by stop-loss.
Typical refund split:
Worked example: $100,000 expected claims, actual claims $70,000 = $30,000 unused. 50% refund split = $15,000 returned to employer.
Two stop-loss components:
Stop-loss insurance is the difference between level-funded and pure self-funded. With level-funded, the employer's worst-case exposure is the aggregate stop-loss, capping the downside.
Unlike ACA-compliant fully-insured small group, level-funded plans medically underwrite the group. Each employee answers a health questionnaire; the carrier prices based on aggregate risk. Implications:
Florida Blue typically does NOT offer level-funded for small group. Carrier availability varies by Florida county.
Partially. Level-funded plans are technically self-funded for federal regulatory purposes — they avoid certain ACA mandates (like state-mandated essential health benefits beyond federal) but still must satisfy preventive care requirements, no annual/lifetime limits on essential benefits, and ACA reporting (Form 1095-B by carrier or Form 1095-C if ALE).
Yes — at the renewal date. Most Florida small businesses can shop both at renewal. Switching from level-funded to fully-insured doesn't trigger underwriting (ACA community rated). Going the other direction (fully-insured to level-funded) requires medical underwriting.
Refunds depend on actual claims experience and the carrier's specific reconciliation method. A $15,000 expected refund could become $5,000 if late-year claims came in higher than projected. The refund is a 'best case' upside, not a guarantee.
A licensed Florida broker can run level-funded quotes alongside fully-insured options.
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