As health insurance premiums keep climbing, small employers are quietly rewriting their playbook. One of the fastest-growing trends in 2025? Level-funded plans.

If you haven’t heard about level-funded plans, you’re not alone! Many employers don’t realize they can access the cost savings of self-funding without the wild financial swings that typically come with it.

What Exactly Is a Level-Funded Plan?

Think of level-funded insurance as a hybrid between fully insured and self-funded. Employers pay a fixed monthly amount—“the level”—that covers claims funding, stop-loss protection, and administration fees. If claims come in lower than expected, the employer may get a refund at renewal; if claims are higher, the stop-loss insurance kicks in.

In short:
Predictable budget + Potential savings = The best of both worlds.

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Why They’re Surging in Popularity

According to recent industry surveys, nearly 40% of small employers now say they’re considering switching to level-funded coverage by 2026. Rising ACA fully insured premiums are pushing employers to look elsewhere, and level-funded plans are increasingly the first stop.

Key advantages:

• Lower premiums compared to ACA community-rated plans
• Access to claims data, which small employers typically never receive
• Refund potential on unused claims
• Flexible plan design, including national PPO networks
• Better control over renewals

Carriers have caught on—many big names (UnitedHealthcare, Aetna, Cigna, and regional Blues plans) now offer small-group level-funded options down to as few as 2 enrolled employees.

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Is There a Catch?

A few considerations employers need to know:

• Claims volatility is still possible (though capped by stop-loss).
• Very small groups or groups with chronic high-cost conditions may not qualify.
• Employers must be comfortable with a non-ACA-rated product.

However, for many healthy, growing small businesses, a level-funded plan is one of the strongest cost-containment strategies available today.

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The Bottom Line

As the renewal landscape gets tougher, level-funded plans give employers something they haven’t had in years: true leverage. With predictable costs, more transparency, and the possibility of end-of-year savings, level-funded coverage is becoming a go-to solution for small businesses looking to stretch their benefits budget without cutting corners.

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📞 Need Assistance?

We’re here to help you navigate level-funded plans! Whether you’re an individual looking to maximize your benefits or an employer aiming to update your plans and support your team, contact our team today for personalized guidance and support tailored to your needs.

Sources

• Kaiser Family Foundation. 2025 Employer Health Benefits Survey. KFF, 2025, http://www.kff.org/health-costs/2025-employer-health-benefits-survey/.
• Marks, Gene. “As Healthcare Costs Rise, More Small Employers Are Turning to Level-Funded Plans.” The Philadelphia Inquirer, 24 Sept. 2025, http://www.inquirer.com/business/small-business/health-insurance-employer-costs-level-funded-20250924.html
• Planned Administrators, Inc. “What Is a Level-Funded Plan?” PAI, http://www.paisc.com/limited-benefits/what-level-funded-plan

This article is intended to provide general information on level-funded health plans and emerging employer health benefit trends. It should not be interpreted as legal, tax, or financial advice. The content is not a substitute for professional guidance regarding your organization’s specific health plan design, funding strategy, or compliance requirements. For advice tailored to your situation, please consult a licensed attorney, tax professional, or qualified employee benefits consultant. © 2025 Apex Benefit Group. All rights reserved.