Level-Funded Health Plans for Kansas Employers

Level funding sits between a fully insured small group plan and a true self-funded plan. You pay one set amount each month, like a premium. Behind that payment, part of the money funds your own claims account, and part buys stop-loss insurance that caps how much your company can lose. If the year runs well, some money may come back.

These plans are common. In the 2025 KFF Employer Health Benefits Survey, 37% of covered workers at firms with 10 to 199 workers were in a level-funded plan. Here is how they work and where they fit for Kansas employers.

How the monthly payment is built

KFF describes a level-funded plan as one where the employer makes a set payment each month to an insurer or third party administrator. That payment funds three things:

• A claims fund. This pays your employees' medical and pharmacy claims up to the expected level for the year.
• Stop-loss premium. This buys insurance that pays claims above set limits.
• Administrative fees. These cover claims processing, network access and customer service.

The carrier or administrator sets the monthly amount from your group's expected claims. You do not write a bigger check in a bad month. The amount stays level for the contract year, which is where the name comes from.

What stop-loss does

Stop-loss is insurance for the plan, not for each employee. KFF describes two types:

• Specific stop-loss pays when one person's claims pass a set dollar amount, called the specific attachment point.
• Aggregate stop-loss pays when the whole group's claims pass a set total for the plan year.

Kansas sets floors for stop-loss sold to small employers. Under K.A.R. 40-1-49, the specific attachment point can be no less than $10,000 per covered person, and the aggregate attachment point can be no less than 120% of expected claims. The policy has to insure the plan or plan sponsor, pay the sponsor rather than employees or providers, and keep paying claims even if the plan sponsor goes bankrupt. A stop-loss policy that does not meet those rules is disapproved for sale in Kansas.

Surplus refunds and the year-end settlement

KFF's survey glossary notes that when claims come in lower than expected, surplus claims payments may be refunded at the end of the contract. That possible refund is the main draw.

The terms vary a lot from one contract to the next. Before you sign, ask:

1. What share of any surplus comes back to you, and what share the carrier keeps.
2. Whether the refund is paid in cash, credited to next year, or only paid if you renew.
3. How long the run-out period lasts for claims incurred in the plan year but paid later.
4. Whether a deficit in one year can raise your monthly amount at renewal.

KFF notes that small employers in these arrangements are often protected from any meaningful extra liability at year end. The flip side is that a high-claims year usually shows up in next year's renewal price.

How it compares with fully insured small group plans

This is the big tradeoff. Fully insured small group plans in Kansas follow the ACA rules for small employers. Level-funded plans are sold as self-funded plans, so they play by different rules.

KFF puts it plainly. For plans sold to employers with fewer than 50 employees, level-funded plans are not subject to the ACA's rating and benefit standards for small firms, and they generally are not subject to state requirements for insured plans. KFF also notes that, unlike insured plans, they use health status in rating and underwriting and are not required to cover the full set of ACA benefit categories (EHB) that insured small group plans must cover.

Here is what that means for a Kansas employer:

• Rating. A fully insured small group plan is priced from the carrier's filed rates, your rating area, and each employee's age. A level-funded quote can also reflect the health of your group, usually through a health questionnaire or claims review.
• Benefits. A fully insured small group plan must cover the ten ACA benefit categories known as EHB. A level-funded plan may cover the same things, but check the plan document rather than assume it.
• Approval. A fully insured plan cannot turn your group down for health reasons. A level-funded carrier can decline or price up a group after underwriting.
• Claims data. Level-funded plans often share claims reports with the employer. Fully insured small groups usually see little or none.

Our plan types guide and the Kansas small group rate tracker give context on fully insured pricing, so you can compare a level-funded quote against filed rate changes.

Who level funding tends to fit

There is no single size cutoff. Each carrier and administrator sets its own minimum group size, and those minimums vary. Groups in the range of roughly 10 to 50 employees, and larger, are where we see level-funded quotes most often.

It tends to fit when:

• Your workforce is younger or healthier than the average small group, so health-based rating helps rather than hurts.
• Your fully insured renewal came in high and you want a second price to compare.
• You want claims reports so you can see what is behind your costs.
• You have cash flow to handle a possible higher renewal after a bad claims year.

It tends to fit poorly when someone on your plan has a known high-cost condition, when your group is very small, or when you want the most predictable multi-year cost. A fully insured plan priced from community rates can be the better buy for those groups.

Risks to understand before you switch

Level funding is not free money. Walk through these with us before you sign:

• Renewal swings. One large claim can raise next year's monthly amount, even with stop-loss in place.
• Coming back to fully insured. You can return to a fully insured small group plan, but plan the timing so nobody has a coverage gap.
• Terminal liability. Ask what happens to claims incurred before you leave but paid after. Some contracts include run-out protection and some do not.
• Plan sponsor duties. As a self-funded plan sponsor you take on more of the paperwork and fiduciary role that the carrier carries on a fully insured plan.
• Lasers. At renewal, a stop-loss carrier may set a higher attachment point for one person with large claims. Ask whether the contract allows it.

Level funding in Kansas

For 2026, four carriers filed fully insured Kansas small group plans with CMS: Blue Cross and Blue Shield of Kansas, Blue KC, UnitedHealthcare, and Medical Associates Health Plan. That fully insured market is the yardstick for any level-funded quote. You can read about each carrier on our carriers page.

Where you are in Kansas also matters. A Wichita employer and an Overland Park employer can face very different fully insured rates because they sit in different rating areas, which changes how much room a level-funded quote has to beat it. Our small business health insurance cost guide covers what moves fully insured pricing.

For groups with 20 or more employees, federal COBRA still applies to a self-funded plan. For smaller groups, note that the Kansas continuation law in K.S.A. 40-2209 is written for insured group policies. Ask how a level-funded plan handles continuation for a group under 20, and read our continuation coverage guide.

Want a level-funded quote next to your fully insured renewal? Send a census through our quote form and we will lay both out side by side.