While level funding is a form of partial self-funding, it operates like a fully-insured plan. The employer pays a set amount each month to cover fixed costs as well as anticipated claim costs.
The costs associated with a level funded plan are often much lower than a traditional group health plan. If claims are running below the estimated funding at the end of the policy period, the employer retains the savings. And, employers with 25 or more employees can establish a monthly health plan budget, while still enjoying the economic advantages of self-funding.