In Misunderstanding Level-Funded Health Insurance Plans, Is The Administration Missing An Opportunity?

Health Affairs September 5, 2023
Katy Talento, Karen Kerrigan, Joel White, Ge Bai

Sixty-five percent of all workers with employer-sponsored health coverage are in self-insured plans, which generally means that the employer, not an independent insurance company, is responsible for the cost of paying out claims from the pool of funds collected in the forms of premiums. Among that population, however, a significant portion are in so-called level-funded plans, which have been described by the Kaiser Family Foundation as “a nominally self-insured option for small or mid-sized employers that incorporates stop loss insurance with relatively low attachment points.”

In 2022, 36 percent of covered workers at small firms reported enrollment in a level-funded plan. Despite their popularity, level-funded plans have historically received little attention from policymakers, analysts, and academics. Although that may be...

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