How does Service 1st Benefits support my business during open enrollment?

We personally manage the entire open enrollment process — from educating employees to handling enrollment forms and answering plan questions. Our goal is to make open enrollment smooth and stress-free for everyone.

Can employees contact you directly for help?

Yes. Employees can reach out to us anytime for questions about claims, coverage, ID cards, or plan details. We act as your team’s benefits partner, not just your broker.

What size businesses do you work with?

We specialize in serving small and medium-sized businesses, typically ranging from 1–200 employees. If you’re growing or planning to expand, we help scale your benefits as your team grows.

Do you handle communication with insurance carriers for us?

Absolutely. We take care of claims issues, employee changes, renewals, and any carrier communication so you don’t have to spend hours on hold.

Do you offer voluntary or supplemental benefits?

Yes. We can provide optional add-ons like disability, accident, or critical illness insurance to enhance your benefits package at little or no cost to the employer.

What types of group benefits do you offer?

We provide comprehensive group health, dental, vision, and life insurance options for small and medium-sized businesses. We help you compare plans, handle enrollment, and manage carrier communication.

What information do you need to provide a quote?

We typically need: Number of employees Basic employee census (age, gender, ZIP code) Current plan (if applicable) Desired benefits or coverage goals We keep the process as simple as possible.

Do you charge fees for your services?

No. Our services — including plan comparison, open enrollment, and year-round support — are provided at no additional cost to your business.

What Is a Level-Funded Health Plan? A Small Business Guide

Charlie Hopgood
7 days ago
4 min read

Most small business owners are familiar with one type of group health insurance: the fully insured plan.

You pay a premium each month. The insurance carrier takes on all the risk. Your rate goes up at renewal whether your employees used their benefits or not.

For many businesses, this model has worked fine. But for a growing number of small employers, it's become increasingly expensive — and there's a better option worth understanding.

Level-funded health plans have emerged as one of the most talked-about alternatives in the small business benefits space. If you've never heard the term — or you've heard it but aren't sure what it means — this guide is for you.

What Is a Level-Funded Health Plan?

A level-funded health plan is a type of employer-sponsored health insurance that combines elements of self-funding with built-in financial protection.

Here's how it works:

Each month, your business pays a fixed, predictable amount — called the "level" payment — to a third-party administrator or insurance carrier. That fixed payment is split into three parts:

Claims funding: Money set aside to pay employee medical claims
Stop-loss insurance: Protection in case claims exceed expectations
Administrative fees: Costs for running and managing the plan

If your employees' claims come in lower than expected over the course of the plan year, you may receive a refund of the unused claims dollars.

If claims come in higher, your stop-loss coverage absorbs the excess — so you're never exposed to catastrophic out-of-pocket costs.

How Is This Different From a Fully Insured Plan?

In a traditional fully insured group health plan, the insurance carrier sets your premium based on your employees' ages, location, industry, and group size. You pay that premium no matter what happens with claims.

If your team has a healthy year and barely uses their insurance, the carrier keeps the difference. You get nothing back.

With a level-funded plan, you have a stake in how well your group performs. Your monthly payment stays fixed and predictable, but the claims pool belongs to your group — not the carrier.

Who Is a Level-Funded Plan a Good Fit For?

Level-funded plans tend to work particularly well for:

Small businesses with 10–200 employees — This size range is often underserved by traditional insurance carriers, yet large enough to benefit from a level-funded structure.

Employers with a relatively healthy workforce — If your team skews younger or tends to have lower healthcare utilization, a level-funded plan may return claims dollars at the end of the year.

Business owners frustrated by renewal increases — If your fully insured premiums have climbed year after year with no explanation, a level-funded plan gives you more visibility into what's actually driving costs.

Companies looking for richer plan designs — Level-funded plans often allow for more customization than off-the-shelf fully insured options, including custom networks, telehealth-forward designs, and enhanced pharmacy benefits.

What Are the Advantages of a Level-Funded Plan?

1. Predictable Monthly Costs

Despite being partially self-funded, your payment stays the same every month. You won't face unexpected spikes mid-year.

2. Potential for Year-End Refunds

If your employees use less healthcare than projected, the unused claims dollars come back to your business. This is something that simply doesn't happen with a fully insured plan.

3. More Transparency

With a level-funded plan, you receive detailed claims data throughout the year. You can see what's actually driving costs and make smarter decisions at renewal.

4. Stop-Loss Protection

Built-in stop-loss insurance caps your financial exposure. If an employee has a major medical event, you won't be left holding the bill beyond your coverage threshold.

5. Access to Better Plan Designs

Many level-funded programs offer plan designs that outperform fully insured options — better networks, lower deductibles, and more employee-friendly cost structures.

What Are the Risks to Consider?

Level-funded plans aren't the right fit for every employer.

If your workforce has high healthcare utilization or significant ongoing medical needs, claims costs may exceed projections. While stop-loss coverage protects against catastrophic outcomes, your base claims budget is still part of the calculation.

It's also worth noting that level-funded plans require more employer engagement than a traditional fully insured plan. You'll receive claims reports and renewal information that require review and decision-making.

That's exactly why working with an experienced benefits broker matters.

What Should You Ask Before Moving to a Level-Funded Plan?

Before switching, it's smart to get answers to these questions:

What does the stop-loss coverage protect against, and at what threshold?
What happens if the plan underperforms for two consecutive years?
Who manages claims administration, and what reporting will I receive?
Is there a minimum group size requirement for this program?
What happens at renewal — can rates increase significantly?

A knowledgeable benefits broker can walk you through the answers specific to your group and help you compare level-funded options side by side with your current fully insured plan.

Is Now a Good Time to Explore Level-Funded Plans?

For many small businesses, the answer is yes.

As fully insured premiums continue rising, level-funded plans have become increasingly competitive — and increasingly accessible to smaller employer groups. Carriers and third-party administrators have expanded their offerings, making it easier than ever for businesses with as few as 10 employees to participate.

If your renewal is coming up in the next 60–90 days, now is the ideal time to have a side-by-side comparison prepared so you can make a confident, informed decision.

How Service 1st Benefits Helps

At Service 1st Benefits, we specialize in helping small and mid-size businesses find the right health plan — fully insured, level-funded, or somewhere in between.

We don't just hand you quotes. We take the time to:

Analyze your current plan and claims history
Run side-by-side comparisons of fully insured and level-funded options
Explain your options in plain language — no insurance jargon
Help you understand the actual risks and potential savings
Manage the transition if you decide to make a change

And our services come at no additional cost to your business.

Ready to Find Out If a Level-Funded Plan Is Right for You?

If you're paying more than you'd like for group health insurance and want to explore whether there's a smarter option for your team, we'd love to help.

Schedule a free consultation with Service 1st Benefits today. We'll review your current plan, run the numbers, and give you a clear picture of what a level-funded plan could mean for your business.