According to Mercer's 2025 National Survey of Employer-Sponsored Health Plans, the average cost of employer-sponsored health insurance reached $17,496 per employee in 2025 — a 6% increase — with costs projected to exceed $18,500 per employee in 2026. For employers with 50-500 employees, these numbers are unsustainable on a traditional fully-insured plan. Level-funded health insurance offers a smarter alternative.
What is Level Funding?
A level-funded plan is a hybrid between a fully-insured and self-funded health plan. Employers pay a fixed monthly amount — covering expected claims, administrative costs, and stop-loss insurance — just like a traditional plan. But here is the key difference: if your employees' claims run under budget, you get money back at the end of the year. According to the 2025 Employer Health Benefits Survey by KFF, 37% of covered employees at companies with 10-199 employees are already enrolled in a level-funded plan — up significantly from prior years.
Who is it right for?
Level funding works best for employers with 10-200 employees who have relatively healthy workforces. It is not a fit for every group, which is why Nyala Health conducts a full claims and census analysis before recommending it. We evaluate your workforce data, model the potential savings, and compare level-funded options across our 195+ carrier relationships to find the best structure for your business.
What are the benefits?
- Fixed, predictable monthly costs.
- Year-end surplus refund if claims run low.
- Full claims data transparency — you see exactly what your employees are spending.
- More plan design flexibility than fully-insured options.
- Stop-loss protection caps your risk if claims run high.
What are the risks?
If your workforce has high claims, you will not receive a refund and your renewal rates may increase. Stop-loss coverage mitigates catastrophic risk, but plan design and carrier selection matter enormously. This is why independent advisory matters — a broker with access to the full market will find you better stop-loss terms than one tied to preferred carriers.
The Nyala Health Approach
We do not recommend level funding because it sounds sophisticated. We recommend it when the data supports it. Every client engagement starts with a cost-benefit analysis comparing your current plan against level-funded alternatives across multiple carriers. If it makes sense, we manage the transition. If it does not, we tell you that too.