Are Level Funded health plans the same as self-funded health plans?

They're similar, but they differ from a purely self-funded arrangement in important ways. Level Funded plans provide additional protection from large catastrophic medical claims with a stop loss insurance policy. So clietns won’t have to pay more for medical and pharmacy claims throughout the year or at the end of their plan year, even if they have high claims costs. Client costs don’t change month to month. Level Funded plans lock in a fixed monthly payment for the plan year, regardless of actual plan participant medical and pharmacy claims.

How does a Level Funded plan work?

An employer's fixed monthly payment goes toward 3 things: Your client's health plan that pays plan participants’ covered medical expenses. Every month, when clients send in their regular payment, part of it is set aside to pay for plan participants’ covered medical bills. In other words, when plan participants go to the doctor, their eligible medical claims are paid straight from the money that was set aside. If the money that goes in during the year is more than what comes out, your client's health plan may get a surplus refund after plan renewal. If plan participants have low medical and pharmacy claims, that refund could be substantial. Administrative services for your plan, including plan participant onboarding, customer service, billing and medical claims processing. A stop loss insurance policy that protects employers if medical claims are higher than expected.

What if a plan participant gets really sick or hurt?

Every month when employers make their payment, part of it goes toward stop loss insurance. This provides coverage for unexpected high medical and pharmacy claims.

Are wellness programs available?

Yes. And because they’re designed to help plan participants get healthier, they may help lower medical claims and provide more savings for everyone.

Why choose a Level Funded plan over a traditional (fully insured) plan?

The 2 biggest reasons: more potential savings and more control. With a fully insured plan, health care costs are based on a wider pool, including businesses that may have higher overall medical claims. A Level Funded plan is based only on your client's plan participants’ medical claims. So when their medical and pharmacy claims are lower than expected, your client's health plan may get a surplus refund at year-end. And because a Level Funded plan is a type of self-funding, employers may be exempt from many Affordable Care Act (ACA) regulations and state premium taxes that can be costly for some businesses. With a variety of plan designs and provider networks available, a Level Funded plan can be truly customized to fit your clients. It’s worth the time to compare these health plans with a traditional (fully insured) plan to see which may be the better fit.

UnitedHealthcare Level Funded

Managing health plan costs is important, but so is offering health benefits your employees actually like. UnitedHealthcare is committed to helping make health care simpler, more affordable and supportive. With understandable benefits, clearer choices and trusted support accessible when and how people want it. UnitedHealthcare Level Funded and health plans are designed to give employeres a different way to balance the cost savings with benefits employees want.

Brochure: Level Funded (pdf)

Designed for savings, stability and simplicity

Providing surplus refund potential

Level Funded plans are based on the medical and pharmacy claims of your plan participants, so if they're lower than expected, your clients' health plans may get a surplus refund at year-end.¹

Keeping costs predictable

Your clients' costs don’t change month to month. Level Funded plans lock in a fixed monthly payment for the plan year, regardless of your actual plan participant medical and pharmacy claims. Stop loss insurance protects employers from unexpected high claims.

Simplifying ACA compliance

Because these plans are a type of self-funded plan, employers may be exempt from many state premium taxes and Affordable Care Act (ACA) regulations, including adjusted community rating.

Find the right fit for your clients

Customize your benefits package from dozens of plan designs, networks and specialty options.

Health Savings Account (HSA), Preferred Provider Organization (PPO) and Exclusive Provider Organization (EPO) plan portfolios
Variety of network options, including the nation's largest proprietary network of 1.7M physicians and health care professionals and 7,000+ hospitals²
Wellness programs and services designed to help plan participants get healthier at no additional cost
Up-to-date reporting on client claims costs, network utilization and more, as well as digital tools to help simplify plan management
Opportunity to save when clients bundle a UnitedHealthcare specialty plan, like vision and dental with a UnitedHealthcare medical plan

Understanding Level funded group health plans

Level funded plans are designed to offer employers predictability with the potential of upfront savings and a surplus refund.

Video transcript

EI232301050.1_Level-Funded_23-2740752_Video_1920_1080 Descriptive Accessibility Script

Instrumental music plays throughout. Three white lines curl across a blue background. Blue text centers a white screen. A female announcer speaks.

ONSCREEN TEXT: Level Funded

Group health plans

FEMALE ANNOUNCER: Level-funded health plans have grown in popularity among small businesses nationwide.

Blue text fades out and a map of the US appears with orange and white dots popping up to represent locations on the map. Blue text appears underneath the map. The map cuts to a montage of people in different scenes, working, socializing, and exercising. The female announcer continues.

ONSCREEN TEXT: Kaiser Family Foundation Employer Health Benefits Surveys, 2019 and 2023. For the purposes of the surveys, a "small business" was defined as groups with 3-199 employees.

FEMALE ANNOUNCER: So, how is a level-funded plan different from a fully insured plan? And why might it be a better fit for your business?

The montage wipes to blue text over a white background. Dark and light blue puzzle pieces appear with text over the pieces. The female announcer continues.

ONSCREEN TEXT: Fixed monthly rate

ONSCREEN TEXT: Claims

ONSCREEN TEXT: Plan administration

FEMALE ANNOUNCER: With a fixed monthly rate covering claims and plan administration, level-funded plans act a lot like fully insured plans.

A third puzzle appears with blue text. The female announcer continues.

ONSCREEN TEXT: Stop loss insurance

FEMALE ANNOUNCER: The difference with level-funded is that part of your fixed rate also goes towards stop-loss insurance, which pays covered medical and pharmacy claims costs that are higher than expected.

The puzzle pieces exit the screen and two blue circles appear. On has an icon of a stethoscope, the other has an icon of an RX pill bottle. The circles wipe up out of screen to reveal blue text over a white background. The female announcer continues.

ONSCREEN TEXT: Higher than expected

White screen dissolves into a blue screen with white text. The female announcer continues.

ONSCREEN TEXT: 2 kinds of stop loss insurance

White text slides out of screen to the right. White text wipes in from bottom of screen. The female announcer continues.

ONSCREEN TEXT: Individual

Aggregate

FEMALE ANNOUNCER: There are two kinds of stop-loss insurance built into a level-funded plan, individual and aggregate. Individual stop-loss protects your plan if claims costs are higher than expected for a particular plan participant. Aggregate stop-loss protects your plan if claims costs are higher than expected across your entire group.

Text dissolves and a light blue circle with a white border appears on the screen with white text below. The female announcer continues.

ONSCREEN TEXT: Claims costs

And if your medical and pharmacy claims costs are lower than expected at the end of your plan year, the savings don't stay with the insurance company like they do with a fully insured plan.

The blue circle shifts to left of screen and a white circle appears to the right of it with white text below. The female announcer continues.

ONSCREEN TEXT: Surplus refund

FEMALE ANNOUNCER: Instead, your level-funded plan earns a surplus refund that you can apply to the following year's plan.

The blue circle disappears and the white circle moves to the center of the screen and dissolve to a gold coin-like circle with three white stripes above it. Small white text appears at the bottom of the screen. The female announcer continues.

ONSCREEN TEXT: Please consult a tax and/or legal advisor to determine if, by receiving this refund, there are any restrictions or obligations. Surplus refund available only where allowed by law.

FEMALE ANNOUNCER: Other advantages include exemption from many Affordable Care Act regulations, including adjusted community rating, lower state premium taxes, potential savings compared to fully insured plans, and more flexibility…

The gold coin-like circle dissolves into a white screen with blue text appearing. Each line of text has an orange checkmark before it. The female announcer continues.

ONSCREEN TEXT: Exemption from many

Affordable Care Act regulations

ONSCREEN TEXT: Lower state premium taxes

ONSCREEN TEXT: Potential savings

ONSCREEN TEXT: More flexibility

Blue text dissolves to a light blue screen with a dark blue folder in the center of the screen. Then a yellow, orange, and white folder fan out slightly from the dark blue folder. The female announcer continues.

FEMALE ANNOUNCER: …with a wide choice of plan designs, provider networks, and built-in wellness programs too.

The folders dissolve to a white screen with blue text. The female announcer continues.

ONSCREEN TEXT: It’s easy to see why

ONSCREEN TEXT: more and more businesses

ONSCREEN TEXT: have

ONSCREEN TEXT: made

ONSCREEN TEXT: the switch

ONSCREEN TEXT: Talk to your broker or

UnitedHealthcare representative

to learn more

FEMALE ANNOUNCER: It's easy to see why more and more businesses have made the switch. See if UnitedHealthcare Level-Funded is a better fit for your business too.

Three blue lines circle in forming a U over a white background. Blue text appears in the center of the screen. The music fades out.

ONSCREEN TEXT: United

Healthcare

There for what mattersTM

Small grey text appearing on the bottom of the screen.

ONSCREEN TEXT: Administrative services provided by United HealthCare Services, Inc. or their affiliates, and UnitedHealthcare Service LLC in NY. Stop-loss insurance is underwritten by UnitedHealthcare Insurance Company or their affiliates, including UnitedHealthcare Life Insurance Company in NJ, and UnitedHealthcare Insurance Company of New York in NY.

ONSCREEN TEXT: B2B EI232301050.1 1/24

Frequently asked questions

Does your client have fewer than 50 employees?

Compare available health plans for small businesses.

Find a plan

Footnotes

Please consult a tax and/or legal advisor to determine if, by receiving this refund, there are any restrictions or obligations. Surplus refund available only where allowed by law.
UnitedHealthcare internal analysis, June 30, 2023.

Disclaimers

Health Savings Account: The UnitedHealthcare plan with Health Savings Account (HSA) is a qualifying high deductible health plan (HDHP) that is designed to comply with IRS requirements so eligible enrollees may open a Health Savings Account (HSA) with a bank of their choice or through Optum Bank, Member of FDIC. The HSA refers only and specifically to the Health Savings Account that is provided in conjunction with a particular bank, such as Optum Bank, and not to the associated HDHP.

UnitedHealthcare Level Funded: Administrative services provided by United HealthCare Services, Inc. or their affiliates, and UnitedHealthcare Service LLC in NY. Stop-loss insurance is underwritten by UnitedHealthcare Insurance Company or their affiliates, including UnitedHealthcare Life Insurance Company in NJ, and UnitedHealthcare Insurance Company of New York in NY.