Level-Funded Health Plans in Florida: The Middle Path Between Fully Insured and Self-Funded

Thirty-seven percent of covered workers at firms with 10 to 199 employees are now on a level-funded plan. That is not a fringe product anymore. It is the default alternative when a fully insured renewal comes back ugly — and for a healthy Florida group, it is frequently the cheapest real coverage available.

Carrier availability in Florida changes year to year. Figures verified August 20, 2026; confirm current carrier participation before making a decision.

How the Structure Works

Start with what a fully insured plan does. You pay a premium. The carrier pays claims. If your employees stay healthy, the carrier keeps the difference. If they don't, the carrier eats the loss — and then raises your renewal to recover it. You never see the numbers.

A level-funded plan reverses the information flow without handing you the risk. You are technically the plan sponsor of a self-funded ERISA plan, but you buy stop-loss insurance that caps what you can owe, and the carrier levels your payments so your monthly bill is a fixed, predictable number. It behaves like a fully insured plan on your bank statement and like a self-funded plan in your reporting.

Growth has been steep. KFF's 2025 Employer Health Benefits Survey found 37% of covered workers at firms with 10 to 199 employees on a level-funded plan, up from 36% in 2024 — and from roughly 6% of small-firm covered workers in 2018. Note the measure carefully: that is a percentage of covered workers, not of employers.

The Three Buckets Your Payment Splits Into

Two kinds of stop-loss are working at once and both matter. Specific stop-loss caps what any single member can cost the plan — this is what protects you from one catastrophic diagnosis. Aggregate stop-loss caps what the whole group can cost across the year. A quote that is unusually cheap is often cheap because one of those attachment points sits higher than it should. Ask for both numbers explicitly.

Who Qualifies

Level-funded is medically underwritten. That single sentence explains most of what follows.

ACA small group coverage in Florida is guaranteed issue — under Fla. Stat. § 627.6699(5)(b), every small employer carrier must offer and issue small employer plans on a guaranteed-issue basis. Level-funded is not ACA small group coverage. Carriers will look at your group before they price it, either through individual medical questionnaires completed by enrolling employees and dependents, or increasingly through algorithmic census underwriting using names, ZIP codes, dates of birth and gender.

What this means in practice:

• A healthy group beats the community rate. If your team skews younger and healthier than the Florida small group risk pool, level-funded should price below your fully insured quote — sometimes substantially.
• An average group breaks roughly even. The savings come from admin efficiency and surplus potential rather than from rating, and the decision comes down to whether you want the claims data.
• A high-claims group should stay fully insured. If underwriting comes back above your fully insured rate, that is the market correctly telling you that community rating is subsidizing you. Take the subsidy.

Group size minimums have drifted downward as carriers compete. Published thresholds range from five enrolling employees at the low end to fifty or more at some national carriers, and several carriers have quietly loosened their stated minimums. Industry observers place the practical target market at 10 to 200 employees with a healthier-than-average workforce. Do not disqualify yourself on a published number — get quoted.

Do Employers Actually Get Money Back?

Sometimes. This is the most oversold feature of level-funded plans and deserves a straight answer.

The most-cited independent figure comes from industry reporting: 37% of employers on level-funded plans received a refund in 2022, with an average surplus of $8,400, and employers typically receive around half of the surplus while the remainder is retained for stop-loss and claims runout. Refunds are commonly issued as credits against future monthly payments rather than as cash, which has tax advantages.

Carriers publish more optimistic numbers about their own books. Cigna's marketing materials have claimed 57% of clients receive a surplus at plan year end averaging $45,000. Florida Blue's Balanced Funding materials have illustrated a 50% refund scenario. UnitedHealthcare's language is more guarded — "your health plan may get a surplus refund at year-end," footnoted "available only where allowed by law."

The Claims Data Advantage — the Real Reason to Do This

Ask an employer who has run level-funded for three years what they value most, and it usually is not the refund. It is knowing what is actually driving their cost.

On a fully insured plan, a 22% renewal arrives as a number with no explanation, and your only leverage is to shop the market blind. On a level-funded plan you can see aggregate utilization, large claimant activity, pharmacy spend, and where the money went. When the renewal arrives, you know whether it is justified. When you shop, competing carriers can price your group accurately instead of loading in uncertainty — which itself tends to produce better quotes.

It also makes benefits decisions concrete rather than theoretical. If pharmacy spend is 30% of your total and concentrated in a handful of specialty drugs, that points to a specific plan design conversation. Without data, you are guessing.

Florida's Stop-Loss Statute — the Guardrail Nobody Mentions

Florida sets a floor on how thin the self-funded layer can be, and it is worth understanding because it protects you.

Under Fla. Stat. § 627.66997, a stop-loss policy issued to a small employer is reclassified as a health insurance policy — and becomes subject to Florida's small group law at § 627.6699 — if the aggregate attachment point is below the greatest of:

1. $2,000 multiplied by the number of employees;
2. 120% of expected claims; or
3. $20,000.

For employers with 51 or more employees the threshold is the greater of 110% of expected claims or $20,000. The statute also requires that once the aggregate attachment point is reached, the policy "must cover 100 percent of all claims that exceed the aggregate attachment point."

Translation: Florida will not let a carrier sell a small employer a nominally self-funded arrangement where the real risk transfer is trivial. If someone pitches you a level-funded plan with an attachment point below those thresholds, it is legally a health insurance policy and has to comply with small group rules.

Which Carriers Write Level-Funded in Florida

This changes annually and it changed meaningfully for 2026. Some specifics worth knowing before someone quotes you a carrier that has left:

Aetna's exit from Florida's fully insured small group market between the 2025 and 2026 state carrier lists is the kind of change that quietly invalidates a comparison spreadsheet built last year. It is also why we requote the whole market each renewal rather than defending last year's answer.

The Honest Risks

• Renewal volatility. Community rating smooths a bad year across the whole Florida small group pool. Underwriting does not. One serious claim in a 15-person group can move your renewal hard.
• Terminal liability. Claims incurred during your plan year but filed after it ends are your responsibility unless terminal liability coverage is included. Ask whether it is in the quote or priced separately.
• Re-entry risk. If you leave the fully insured market for three good years and then have a bad one, you can return — Florida guaranteed issue protects that — but you return at whatever the community rate is then, which may be well above where you left.
• ERISA obligations. You are the plan sponsor of a self-funded plan. That carries fiduciary duties, plan document requirements and Form 5500 filing obligations at certain participant counts. Most carriers bundle the administrative support, but the legal responsibility is yours.
• Surplus is not salary. Covered above and worth repeating: do not spend it before it exists.

Level-Funded vs Fully Insured vs ICHRA

There is no universally correct answer here, which is exactly why we quote all three. The right structure depends on your census, your claims history, your employees' household incomes, and how much administrative work you are willing to own.

One benchmark for context: KFF's 2025 survey put the average family premium at firms with 10 to 199 workers at $26,054, with those employees contributing $8,889 — a 36% share, versus 23% at firms with 200 or more workers. Small employers are already asking their people to carry more. Structure choice is one of the few levers that moves that number.

Level-Funded Questions Florida Employers Ask