Can You Get Money Back From Your Insurance Company? Understanding Level Funded Health Plans

What if your business could actually get money back from the insurance company at the end of the year? That’s the idea behind level funded health insurance plans, and they’re rapidly gaining popularity among cost-conscious employers.

Let’s explore how level funded plans work, how they differ from traditional insurance, and why they might be the right fit for your company’s benefits strategy.

Understanding the Basics: Fully Insured vs. Level Funded

Most employers are familiar with a fully insured health plan. You pay a fixed premium each month to the insurance carrier, and in return, they handle all claims—regardless of the cost. There’s no fluctuation in your payments, but there’s also no refund if claims end up being low for the year. All that unused money stays with the insurer.

A level funded plan is structured differently. While your monthly payments may look similar to a traditional plan, those payments are divided into three key components:

• Administrative Costs: A fixed fee per employee to cover administrative overhead.
• ISL (Individual Stop Loss): Caps your company’s responsibility for any single employee’s claims. For example, if the ISL is $25,000 and someone has a $1 million claim, you only pay the $25,000—the insurance covers the rest.
• ASL (Aggregate Stop Loss): Limits your total group liability. Even if multiple employees have high claims, you’re protected once the group threshold is hit.

Here’s the Magic: Claim Surplus Refunds

Level funded plans include a claims budget—a portion of your premium that is set aside to cover expected claims. If your employees have fewer claims than expected, that unused portion may be refunded back to you at the end of the year. Typically, this refund is processed about three months after the plan year ends.

This creates a powerful incentive: if your workforce stays healthy, your company may share in the savings.

Why Level Funded Plans Are Popular

Besides the potential refund, these plans offer more transparency and control over healthcare spending. They’re especially attractive to employers who:

• Want predictable monthly costs, like in a fully insured plan
• Are comfortable taking on moderate risk in exchange for potential savings
• Have a healthy workforce with lower-than-average claims

However, level funded plans aren’t allowed in every state for every group size. For example, in New York State, they may not be available to groups under 100 lives. But in places like Florida, Arizona, or parts of the Northeast, they’re available to smaller groups—including companies with just 10 employees.

What About Self-Funded Plans?

A self-funded plan takes things one step further. While it includes similar components—admin fees, ISL, and ASL—it doesn’t include a built-in claims fund. Instead, the employer pays claims directly as they arise. While this model offers the most savings potential, it can also be a bookkeeping nightmare and carries significant risk if claims spike unexpectedly.

Recap: Three Plan Structures

1. Fully Insured: Fixed cost, no refund, insurer handles everything.
2. Level Funded: Fixed cost, potential refund, insurer handles claims but employer shares in savings.
3. Self-Funded: Lowest fixed cost, highest risk, employer pays claims directly.

Is a Level Funded Plan Right for You?

If you're looking for more control and the opportunity to recoup premium dollars, level funded plans could be a smart option—especially if your employees tend to be healthy and low utilizers of care.

At Benton Oakfield, we specialize in helping business owners navigate these choices and design benefits strategies that balance cost, coverage, and compliance. If you’re ready to explore level funded plans—or just want to understand your options—contact us today.

We’re happy to run comparisons, explain your funding thresholds, and help you decide what makes the most sense for your business. Because when it comes to benefits, you should benefit too.