Is Your Business Paying Too Much for Health Insurance?

If you run a Washington business with 20 to 100 employees, you have probably felt the sting of double-digit renewal increases. Traditional fully insured health plans lock you into a fixed premium regardless of how healthy your workforce actually is. Level-funded health insurance changes that equation, and for many Washington employers, the savings are significant.

Ready to find out if a level-funded plan fits your team? Schedule a free consultation with WHIA and get a side-by-side analysis at no cost.

This guide explains how level-funded plans work, how they compare to fully insured and self-funded alternatives, which carriers operate in Washington State, and what you need to consider before switching.

What Is Level-Funded Health Insurance?

A level-funded plan is a hybrid funding arrangement that sits between a traditional fully insured plan and a fully self-funded one. Each month, your business pays a fixed amount that covers three buckets:

• Claims fund: A pool set aside to pay employee medical claims as they occur.
• Stop-loss insurance: A protection layer that caps your exposure if one employee has catastrophic costs or total group claims spike unexpectedly.
• Administrative fees: Payment to the third-party administrator (TPA) that processes claims and handles compliance.

The key difference from a fully insured plan: if your group’s actual medical claims come in below what was projected, you receive a refund of the unused claims fund at the end of the plan year. According to the Kaiser Family Foundation, enrollment in level-funded plans among small businesses rose from 6% in 2018 to 38% in 2023. Washington employers are part of that trend.

Level-Funded vs. Fully Insured vs. Self-Funded: A Washington Employer’s Comparison

Before choosing a funding model, it helps to see how the three main options stack up for businesses your size.

Feature	Fully Insured	Level-Funded	Self-Funded
Monthly cost predictability	Fixed premium	Fixed monthly payment	Variable, claims-driven
Claims surplus refund	No	Yes	Yes
Stop-loss protection	Built in (carrier absorbs)	Included (specific + aggregate)	Must purchase separately
Claims data access	None or limited	Full anonymous reporting	Full reporting
ACA state mandates	Fully subject	Partially exempt (ERISA)	Largely exempt (ERISA)
Ideal group size	Any size	20-200 employees	100+ employees
Typical savings vs. fully insured	Baseline	20-40%	25-45%

For Washington businesses in the 20-100 employee range, level-funded plans offer a practical middle ground. You get the budget predictability of a fully insured plan while capturing the cost-savings upside that self-funded plans have historically reserved for larger companies.

Wondering which model fits your headcount and health claims history? Explore small group insurance options at WHIA or call 1.833.292.8844 for a quick 15-minute review.

How Washington’s Insurance Market Affects Your Options

Washington State has its own regulatory environment that shapes what level-funded plans can and cannot do here. Because level-funded plans are structured as self-insured arrangements and governed by ERISA rather than state law, they are partially exempt from some Washington State insurance mandates. That can reduce costs compared to a fully insured plan sold by a Washington-licensed carrier.

However, employers must understand that stop-loss thresholds in Washington are subject to state-specific guidelines. Working with a broker who knows the Washington market is important when reviewing attachment points and policy structures.

Which Carriers Offer Level-Funded Plans in Washington?

Not every carrier licensed in Washington State offers a level-funded product, and those that do vary considerably in plan design, network access, stop-loss terms, and reporting capabilities. Below is an overview of carriers and arrangements commonly available to Washington employers in the 20-100 employee range.

Regence BlueCross BlueShield of Washington

Regence is one of Washington’s dominant fully insured carriers and also partners with TPA networks for level-funded arrangements. Employers gain access to Regence’s extensive provider network across the state. If your employees are spread across western and eastern Washington, network breadth matters and Regence tends to perform well here.

Premera Blue Cross

Premera is another major Washington carrier with strong provider relationships across the Puget Sound region and beyond. Premera offers both fully insured and alternative funding arrangements, and their data transparency for level-funded groups is generally strong, giving employers clear insight into claims trends.

UnitedHealthcare and Aetna (National Carriers with WA Presence)

Large national carriers often have level-funded product lines marketed to smaller employers. Their TPA infrastructure and stop-loss products can be competitive, and their networks cover employees who travel or live across state lines. The trade-off is sometimes less local carrier flexibility compared to Regence or Premera.

Independent TPAs with Stop-Loss Carriers

Some Washington employers work with an independent TPA paired with a stop-loss carrier such as Sun Life, Symetra, or Voya Financial. This arrangement gives the most flexibility in plan design and potentially the most competitive stop-loss pricing, but it requires a broker who can assemble and manage the moving parts. This is a specialty that WHIA handles for Washington clients regularly.

Because WHIA is appointed with every health insurance carrier in Washington State, we can run quotes across all of these arrangements and present the top options in a simplified comparison rather than leaving you to evaluate them independently.

How Much Can Washington Employers Actually Save?

The 20-40% savings figure cited frequently in the industry is real, but it depends on your group’s claims history and overall health profile. Here is how the savings actually materialize:

Claims Refund at Year-End

If your group is healthier than projected, the unused portion of the claims fund comes back to you. A group of 50 employees that comes in 25% under projected claims could see a refund in the range of tens of thousands of dollars. That money stays with your business, not the carrier.

ERISA Exemption from Some State Mandates

Washington-mandated benefits add cost to fully insured plans. Level-funded plans structured under ERISA can avoid certain mandates, which lowers the base premium equivalent compared to an insured product.

Claims Data Drives Future Savings

Detailed, anonymous claims reporting lets your team (and your broker) spot health trends early. If data shows high pharmaceutical costs or a specific chronic condition driving claims, you can introduce targeted wellness programs or carve-outs before the next renewal. This cycle of improvement is not available with a fully insured plan where the carrier owns the data.

To put real numbers on what your group might save, the best step is a market analysis from a broker who runs quotes across all Washington carriers. Group health insurance analysis from WHIA includes a company health risk report and competitive benchmark at no cost to you.

Is a Level-Funded Plan Right for Your Washington Business?

Level-funded plans tend to work best when certain conditions are met. Consider the following questions:

• Is your workforce relatively healthy? Groups with lower-than-average claims experience benefit most. If your prior year claims ran well below premium, you likely overpaid in a fully insured plan and would see a refund in a level-funded structure.
• Do you have 20 or more employees? Below 20, the actuarial risk is harder to absorb even with stop-loss, and carriers have less interest in extending level-funded terms. Above 20, the math begins to work in your favor.
• Are you paying double-digit renewal increases? If your current carrier is renewing at 10-15% annually, a level-funded plan with access to your own claims data gives you a basis to challenge those increases.
• Do you want more control over plan design? Level-funded arrangements allow more flexibility in benefit structure than fully insured plans, which means you can tailor benefits to what your employees actually use.

On the other hand, a level-funded plan may not be the best fit if your group has several high-cost claimants currently in treatment or if cash flow makes a potential shortfall in the claims fund difficult to manage. A good broker will run the numbers honestly and tell you when a fully insured plan is the better call for your situation.

Not sure if your group qualifies? Talk to a WHIA benefits advisor and get an honest assessment in 15 minutes. Call 1.833.292.8844 or schedule online.

Common Questions Washington Employers Ask

What happens if my employees have unusually high claims in one year?

Stop-loss insurance handles this. Specific stop-loss kicks in when a single individual’s claims exceed a set threshold (often $20,000-$50,000 depending on your plan). Aggregate stop-loss activates when total group claims exceed the projected amount. Your liability is capped; the stop-loss carrier covers the excess.

How long does it take to switch from a fully insured plan to a level-funded plan?

Most transitions happen at renewal time and take roughly 60-90 days to complete from the decision point. Open enrollment, employee communications, and TPA setup all fall within that window. WHIA handles the administrative side for clients making this switch.

Will my employees notice any changes?

Employees generally see the same plan design, the same insurance cards, and the same networks they are used to. The funding change is largely invisible to them at the point of care. What may change is the benefit design itself if you choose to adjust coverage levels at the same time.

Can nonprofits use level-funded plans?

Yes. Washington nonprofits with 20+ employees qualify for level-funded arrangements through the same carriers and TPA networks available to for-profit employers. The ERISA exemption applies equally. WHIA works with a number of Washington nonprofits on level-funded plans and can provide references upon request.

Next Steps: Get a Free Level-Funded Analysis

WHIA works exclusively with Washington State businesses and nonprofits. Vernon Bonfield and the WHIA team have been navigating Washington’s insurance market for over 26 years, and level-funded plan analysis is a core part of what we do for every client who fits the profile.

If you want to know whether level-funded health insurance would save your business money, the process is straightforward. We review your current plan, run quotes across every carrier available in Washington, and present you with a clear comparison. There is no obligation and no pressure. If your current fully insured plan is actually the best option for your group, we will tell you that too.

Our advisory fee comes with a guarantee: if we cannot demonstrate at least $5,000 in savings, we refund it entirely.

Take the first step: Schedule your free consultation with WHIA or call 1.833.292.8844 to speak with a Washington benefits advisor today.

You can also learn more about related funding strategies we use with Washington employers:

• How stop-loss insurance protects self-funded and level-funded employers
• Transparent PBM contracts: how Washington employers cut pharmacy costs
• Group captive health insurance for Washington businesses

Frequently Asked Questions

What is level-funded health insurance in Washington State?

Level-funded health insurance is a hybrid plan structure where Washington employers pay a fixed monthly amount covering projected claims, stop-loss insurance, and administrative fees. If actual claims are lower than projected, the employer receives a refund at year-end. It gives businesses the cost predictability of fully insured coverage with the potential savings of self-funding.

How much can Washington employers save with a level-funded plan?

Washington employers with healthy workforces typically save 20-40% compared to a traditional fully insured plan. Savings come from three sources: year-end refunds of unused claims funds, reduced exposure to Washington State insurance mandates under ERISA, and claims data that allows proactive cost management at renewal.

How many employees does a Washington business need for a level-funded plan?

Most carriers offering level-funded health plans in Washington State work with groups of 20 or more employees. Businesses in the 20-100 employee range are the primary market for level-funded arrangements. Larger groups of 100+ may find fully self-funded plans even more cost-effective.

Which carriers offer level-funded plans in Washington State?

Washington employers can access level-funded arrangements through major carriers including Regence BlueCross BlueShield of Washington and Premera Blue Cross, as well as national carriers like UnitedHealthcare and Aetna. Some employers work with independent TPAs paired with stop-loss carriers such as Sun Life or Symetra. A Washington benefits broker appointed with all state carriers can run a full market comparison.

What is stop-loss insurance in a level-funded plan?

Stop-loss insurance is a financial protection layer included in every level-funded plan. Specific stop-loss caps the employer’s liability when a single employee has very high claims (the threshold is set at enrollment, typically $20,000-$50,000 or higher). Aggregate stop-loss kicks in if total group claims exceed the projected amount. Together they ensure the employer’s financial exposure is predictable and capped.