Level Funded Group Health Plans in Illinois

Level funded health plans occupy a compelling middle ground between fully insured and fully self-funded arrangements. They offer the budget predictability of a fixed monthly payment while giving employers access to their own claims data and the potential for a year-end refund if their group stays healthy. For many Illinois businesses with 10 to 150 employees, level funded plans have become the preferred alternative to traditional fully insured coverage.

How Level Funding Works

Each month, the employer pays a fixed “level” amount per employee to the plan administrator or carrier. This monthly payment is divided into three components:

1. Administrative costs: TPA fees, network access fees, and carrier profit margin.
2. Expected claims fund: The pooled amount projected to cover your employees’ anticipated medical claims for the month.
3. Stop-loss insurance premium: Coverage that protects the employer if actual claims exceed the funded amount.

At the end of the plan year, the carrier runs a claims reconciliation. If your group’s actual claims were lower than the amount funded into the claims account, the surplus is refunded to the employer — often 50% to 100% of the unused claims funds, depending on the contract. If claims exceeded the funded amount, stop-loss insurance pays the difference, and the employer owes nothing beyond the fixed monthly payment.

Stop-Loss Insurance: Your Safety Net

Stop-loss insurance is a critical component of every level funded arrangement. There are two types:

• Specific stop-loss: Protects against any single member’s claims exceeding a set threshold (typically $20,000–$100,000 per person per year). Once a member hits the specific stop-loss attachment point, the stop-loss carrier pays 100% of additional claims for that individual.
• Aggregate stop-loss: Protects the entire group if total plan claims exceed a specified percentage of expected claims (commonly 125%). If the group as a whole has a catastrophic year, aggregate stop-loss caps the employer’s total exposure.

The Illinois Advantage: Freedom from State Mandates

Level funded plans, while they look like insurance products to employees, are legally classified as self-funded ERISA plans. This has an important consequence: they are generally not subject to Illinois state insurance mandates that apply to fully insured plans. This means level funded plans can sometimes offer leaner, lower-cost benefit designs that exclude certain mandated benefits required of fully insured small group plans — though many employers choose to include those benefits anyway for competitive recruiting purposes.

Is Level Funding Right for Your Group?

Level funded plans are best suited for groups that:

• Have 10 to 150 employees (some carriers go as low as 5 or as high as 500)
• Have a relatively young and healthy workforce with low expected claims
• Want visibility into their own claims data to manage costs proactively
• Are paying high fully insured premiums and suspect they are subsidizing other groups
• Are willing to undergo medical underwriting (health questionnaires) for better pricing

Level funded plans are generally not recommended for groups with several members managing serious chronic conditions, as high expected claims can result in unfavorable underwriting or pricing that eliminates the cost advantage.

How Claims Reporting Works

One of the most significant advantages of level funded plans is access to annual (and often quarterly) claims experience reports. These reports show employers:

• Total paid claims for the year, broken down by category (medical, Rx, mental health, etc.)
• Which diagnosis categories are driving the most spend (without revealing individual member identity)
• How their group’s claims compare to industry benchmarks
• Renewal projections based on actual experience rather than carrier community pooling

This data enables proactive cost management — for example, implementing a pharmacy benefit strategy to address high Rx costs, or adding direct primary care access to reduce ER utilization.

Level Funded Carriers Available in Illinois

Carrier / Product	Group Size Range	Notable Feature
Aetna Funding Advantage (AFA)	10–200 employees	CVS/MinuteClinic integration, strong Rx management
UnitedHealthcare Navigate / Benefit Advisor	25–300 employees	Motion wellness rewards, Rally health platform
BCBSIL BlueEdge	10–499 employees	Access to BCBSIL’s 96%+ IL provider network
Cigna Level Funded (CLF)	10–149 employees	Evernorth pharmacy, MDLive virtual care
Sana Benefits	5–500 employees	DPC included, transparent pricing, no hidden fees
Allied National	2–50 employees	Flexible plan design, strong for hourly workforces
Trustmark Health Benefits	10–300 employees	IL-headquartered, voluntary benefits bundling
Surest Level Funded (UnitedHealthcare)	2-50 employees	No deductible or coinsurance, copays shown in advance in the Surest app
Arlo Health	5+ employees	$0 primary and virtual care, built-in stop-loss, year-end surplus return

Pricing for level funded plans varies significantly based on your group’s age distribution, zip code, and the health questionnaire responses of employees. Contact us for a customized quote comparison across these carriers.