Alternative Funding Employee Benefits Plans

A proactive way to take control of your benefits costs

Alternative funding and Level Funding is a different approach to financing employee medical and dental plans. It enables employers (Plan Sponsors) to directly fund their actual claim costs while limiting their risk by purchasing stop-loss insurance. Although it is not for every business, it is worth exploring to see if this solution is right for yours.

Partially Self-Insured Employee Benefits Plans
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Partially Self-Funded Insurance Solutions

Alternative Funding Insurance Solutions

Alternative Funding Insurance Solutions – It’s like being your own boss for your benefits.

With a Alternative Funding plan, you’re taking control of your company’s benefits. You can steer the benefits ship in the direction that works best for you and your employees. Plus, you get to keep more of your money in your pocket instead of giving it all to the insurance company. So why not give alternative-funding a look? It’s like being your own boss for your benefits.

Here’s why you might want to consider a Alternative Funding Insurance plan:


Alternative-funding offers employers a powerful, practical alternative to traditional insurance that allows them to reap the benefits of larger employers.


Alternative-funding rewards employers for good claims experience in a way that makes sense for smaller businesses.


Alternative-funding with stop-loss coverage protects employers from unusually high claims experience.

Fully-Insured versus Self-Funded

Claims Fund

The equity in the plan that is used to pay for those expected claims not covered by stop-loss insurance

Stop-Loss Insurance

The risk-limiting part of the plan

Administrative Fees

Cost of managing the plan

Cost Components of Fully-Insured vs. Alternative Funding Health Plan Fully Insured = The insurance company assumes all the risk. Alternative Funding = The employer shares in the savings when claims go well.

Flexible Benefit Options

Employers have a wide variety of plan options to choose from:

  • PPO Plans
  • EPO (HMO-like) Plans
  • High Deductible Health Plans with an HRA or HSA
  • Dual Plan Options
  • Referenced Based Pricing plans

Employers can mix-and-match the benefit variables to meet their specific benefit plan objectives:

  • Deductible Amount
  • Co-insurance Percentage
  • Out-of-Pocket Maximum
  • Office Visit Copayments
  • Prescription Drug benefits

Benefits to Members

Lower healthcare costs:

  • Discounted plan management fees
  • Flexible plan design to avoid or limit state mandated benefits
  • Reduction in taxes – no state premium tax (2-3%)

Other Benefits to Members:

  • Excellent reporting capabilities
  • Improved cash flow – no carrier claim reserve required
  • More control in claims administration
  • Consistent benefit plan communications
  • ERISA plan vs. state insurance departments
  • Improved service – eliminates bureaucracy
Find Out If An Alternative Funding Plan Is Right For You

Book a call with an Employee Benefits Expert