Self-funded isn't the same thing as level-funded — it's a step further. Instead of a bundled monthly payment, the employer pays claims directly as they happen, sees exactly where every healthcare dollar goes, and keeps 100% of any savings in a good year. Stop-loss insurance caps the downside.
Three structures, three very different levels of control.
General structural comparison for education. The right fit depends on your group's size, claims history, and risk tolerance — not a one-size answer.
Self-funding isn't for every business — it takes financial stability and claims data to manage the variability well. From Loudoun and Fairfax to Richmond and Henrico to Lynchburg and Danville, this is for larger, established employers ready to take the next step.
A group large enough to have credible claims data and the financial stability to manage year-to-year variability in actual claims paid.
Self-funded plans are governed by ERISA rather than state insurance mandates, giving employers significantly more control over plan design.
A self-funded plan gives full transparency into claims data — exactly what's being spent, and on what, instead of a black-box premium.
Under self-funding, the employer keeps 100% of what isn't spent on claims — no carrier retains a margin on a favorable year.
Self-funding trades the predictability of a bundled premium for control, transparency, and the potential for greater savings.
The employer pays employee medical claims directly out of company funds as they're incurred, rather than a fixed monthly premium to a carrier.
A TPA handles claims processing, network access, and day-to-day administration — the operational side stays professionally managed.
Caps exposure at both the individual claimant level and in aggregate across the group, protecting against a catastrophic claims year.
Whatever isn't spent on actual claims stays with the business — the core financial advantage over both fully-insured and level-funded structures.
The employer pays employee medical claims directly out of company funds, using a third-party administrator for processing and stop-loss insurance to cap exposure.
Level-funded bundles claims funding, fees, and stop-loss into one consistent monthly payment. Self-funded pays actual claims directly, with more variability but more control and 100% retained savings.
Most common among employers with 100+ employees who have the financial stability and claims data to manage variability, though smaller sophisticated groups sometimes self-fund too.
Caps financial exposure, covering claims above a specified threshold either per claimant or in aggregate — protecting against a catastrophic year.
Full transparency into claims data, more plan design flexibility since self-funded plans are ERISA-governed rather than subject to state mandates, and 100% retained savings in a good year.
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