Fully insured vs level-funded vs self-funded in New Jersey
These are three ways to pay a monthly health bill. They are not three carrier brands. The useful question is who keeps unused claims money, what a bad year costs, and when level-funded is not a fit.
The short version
- Fully insured: fixed premium. Carrier keeps the surplus. You rarely see claims.
- Level-funded: fixed monthly amount. Stop-loss caps the worst case. Surplus can come back if claims run low.
- Self-funded: you keep surplus and see claims, with more cash-flow movement.
- Level-funded is not a fit for claims-heavy groups, groups that will not send documents, or groups that want a black box.
The three monthly-payment structures
All three show up as a number you pay each month. What changes is who holds unused money, whether you see claims, and how a spike is capped. How level-funded works is the product page. This page is the comparison.
| Compare | Fully insured | Level-funded | Self-funded |
|---|---|---|---|
| Monthly cost | Fixed premium | Fixed monthly amount | Admin fixed; claims vary; stop-loss optional |
| Who keeps the surplus | The carrier | Often the employer | The employer |
| See your claims data | Rarely | Yes | Yes |
| Risk if claims spike | Carrier's | Capped by stop-loss | Often capped by stop-loss (optional) |
| Best fit | Hands-off, any size | Healthy groups | Larger, sophisticated groups |
Worst case on level-funded and self-funded is the stop-loss cap you agreed to before you signed. It is not a 3-year expected cost. For New Jersey small employers, those caps also sit on statutory floors. NJ stop-loss floors.
When level-funded is not a fit
This is the filter. If any of these is you, do not force the structure.
- Claims-heavy or older census. Health-status underwriting cuts both ways. A rough group may not beat community-rated fully insured.
- You will not send documents. Without a census and a current rate, there is nothing honest to model.
- You want a black box. Level-funded shows claims. If you want one letter a year and no questions, stay fully insured.
An honest analysis should say not a fit when that is the answer. That is the point of this page.
Questions owners actually ask
Fully insured is a fixed premium. The carrier keeps unused premium. Level-funded is a fixed monthly amount that funds claims, administration, and stop-loss. If claims run under what was funded, unused claims money can come back as a surplus refund. Worst case is the stop-loss cap you agreed to before signing, not a 3-year expected cost.
It is not a fit if the group is claims-heavy, if you will not send documents, or if you want a black box and a letter once a year. Those groups should stay fully insured or wait. An honest analysis should say so.
No. Self-funded groups often buy stop-loss, but it is optional. Claims cash-flow is not leveled into one monthly number the same way. It fits larger, more sophisticated groups. Most healthy New Jersey groups in the 25-1,000+ range should model level-funded first.
No. How the product works lives on the level-funded page. This page is the comparison plus when not to.
Keep reading
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