How level-funded plans give Louisiana employers the predictability of fully insured plans with the savings potential of self-funding.
The Problem with Traditional Fully Insured Plans
With a fully insured health plan, you pay a fixed monthly premium to an insurance carrier. The carrier collects all premiums from all their employer clients, pools the risk, and pays claims out of that pool.
The appeal is predictability — you know exactly what you'll pay each month. But the hidden cost is significant:
- You're paying for the carrier's administrative expenses
- You're paying for their profit margin
- You're subsidizing the claims of other employer groups in the pool
- If your employees have a healthy year with low claims, you see none of that money back
For small and mid-size Louisiana employers, fully insured plans often mean overpaying by tens of thousands of dollars annually — not because the coverage is bad, but because the structure isn't designed in your favor.
How Level-Funded Plans Work
A level-funded plan is a form of self-insurance with a fixed monthly payment structure. Here's the basic mechanics:
You pay a fixed monthly amount, just like a fully insured plan. That fixed amount covers three things:
- An estimated claims fund (what's expected to cover your employees' actual healthcare costs)
- Stop-loss insurance (protection against unexpectedly high claims)
- Administrative fees (TPA services, carrier admin, etc.)
Your claims are paid from your dedicated claims fund, not pooled with other employers. This matters — your costs reflect your group's actual health utilization, not someone else's.
At the end of the plan year, one of two things happens:
- If your actual claims came in under the funded amount, you receive a refund of the surplus — typically 50–100% of unused funds depending on your arrangement
- If your actual claims exceeded the funded amount, your stop-loss insurance kicks in and covers the excess — you never pay more than your fixed monthly amount
This structure gives you the predictability of a traditional plan with the savings potential of self-funding.
Who Level-Funded Plans Work Best For
Level-funded plans are most effective for:
Groups of 10–100 enrolled employees — Small enough that traditional self-funding carries too much risk, but large enough that claims data is meaningful. Level-funding hits the sweet spot.
Employers with a reasonably healthy workforce — If your employees are generally younger, active, and low-utilization, a level-funded plan will almost always outperform a fully insured plan financially.
Employers tired of renewal increases — Because your rates are tied to your own claims experience rather than a carrier's pooled book of business, good health years translate into lower rates at renewal.
Louisiana employers in industries with stable workforces — Manufacturing, professional services, construction, and hospitality groups with consistent employee demographics tend to see the strongest results.
What to Watch Out For
Level-funded plans aren't the right fit for every group. Some considerations:
High-utilization groups need careful analysis. If your workforce includes employees managing chronic conditions or high Rx costs, a level-funded plan can actually cost more than a fully insured plan in a bad claims year — though stop-loss protection limits your exposure.
Not all level-funded products are structured the same. The refund percentage, stop-loss attachment points, and administrative fees vary significantly by carrier and TPA. A plan that looks cheaper on the monthly rate but has poor stop-loss terms can become expensive in a high-claims year.
You need claims data to price them accurately. Carriers offering level-funded plans will want to underwrite your group based on demographics and, if available, prior claims history. Newer groups without claims history will be priced more conservatively.
Level-Funded vs. Fully Insured: The Bottom Line
| **Fully Insured** | **Level-Funded** | |
|---|---|---|
| Monthly payment | Fixed | Fixed |
| Claims transparency | None | Full |
| Year-end refund | No | Yes, if claims are low |
| Risk exposure | None beyond premium | Capped by stop-loss |
| Rate tied to your claims | No — pooled | Yes — your group only |
| Best for | Groups wanting zero risk exposure | Groups with healthy employees seeking savings |
Calculate Your Savings
Enter three numbers and see what your health plan is actually costing you — takes 30 seconds, no documents needed.
Next Step
If you're a Louisiana employer with 10 or more enrolled employees, a level-funded plan analysis takes about 30 minutes. We'll review your current plan, run your group's demographics through available level-funded options, and show you what a realistic refund scenario could look like for your business.