Self-Funding Basics for Employers Starting a Health Plan · Article 1
Why Pay a Health Insurance Carrier More Than You Have To?
How Self-Funding Can Lower Healthcare Costs and Put Employers Back in Control
Every year, employers write larger and larger premium checks with little idea where the money goes. Even if employees barely use their health plan, the insurance company keeps the premium.
Self-funding flips that model on its head.
Instead of paying for the insurance company's risk, overhead, and profit, employers fund their own healthcare plan and pay only for eligible claims as they occur. For many organizations, this creates a smarter, more transparent way to finance employee benefits.
Why Self-Funding Can Cost Less
Self-funding isn't about reducing benefits—it's about eliminating unnecessary costs built into traditional insurance premiums.
Employers can benefit from:
Paying only for actual claims instead of fixed insurance premiums.
Reduced carrier risk charges and profit margins.
Greater cash flow by keeping healthcare dollars until claims are paid.
Complete claims transparency to better understand healthcare spending.
Flexible plan designs tailored to the needs of the workforce.
Potential long-term savings for employers with healthy or lower-utilizing populations.
Simply put, when claims are lower, employers—not the insurance company—benefit.
Three Ways to Self-Fund
Health Plan Apply offers three different self-funded solutions, each designed for a different employer strategy.
LevelMax™
Predictable Payments. Comprehensive Coverage.
LevelMax™ is a level-funded major medical plan that combines the simplicity of a fixed monthly payment with the advantages of self-funding.
Each monthly payment includes:
- Administrative services
- Stop-loss insurance
- Expected claims funding
The claims portion is held by the Third-Party Administrator (TPA) and used to pay claims throughout the year.
If claims are lower than expected, eligible employers may receive a refund of unused claims funds at the end of the plan year.
Best for employers who want predictable monthly costs without giving up the financial advantages of self-funding.
LevelFlex™
Keep Your Money Until Claims Are Paid.
LevelFlex™ is true self-funding.
Instead of sending claims money to a carrier or TPA every month, the employer keeps the money until claims actually need to be paid.
That means:
- Better cash flow
- More financial control
- Greater transparency
- Flexible plan design
- Stop-loss protection against catastrophic claims
Rather than letting someone else hold your healthcare dollars, your business keeps them working for you.
Best for employers looking to maximize the financial benefits of self-funding.
MEC Flex™
One Flat Fee. Maximum Flexibility.
MEC Flex™ brings the advantages of self-funding to Minimum Essential Coverage (MEC).
Instead of paying traditional insurance premiums, employers pay:
A flat $59 administrative fee per enrolled employee
The actual eligible claims incurred under the plan
Even better, the $59 fee never changes based on enrollment tier. Whether an employee enrolls as Employee Only, Employee + Spouse, Employee + Child(ren), or Family, the administrative fee remains exactly the same.
Savings are driven by several factors:
- Flat administrative pricing
- Historically low plan utilization
- No hospital or surgical coverage
- Pay only for actual eligible claims
- Start with preventive care and expand benefits as needed
For many employers, this creates one of the most affordable ways to provide ACA-compliant coverage.
Best for employers looking for maximum flexibility and minimum cost.
Which Self-Funded Plan Fits Your Business?
Whether you want the stability of LevelMax™, the financial control of LevelFlex™, or the affordability of MEC Flex™, self-funding gives employers something traditional insurance rarely does:
Control. Transparency. Flexibility.
Instead of paying for an insurance company's assumptions, you pay for your employees' actual healthcare needs.
That's why more employers are making the move to self-funding.