Group Health Broker Benchmarks
Level-Funded Health Plan Adoption Benchmarks (2026)
More than a third of covered workers at small firms are now on level-funded plans. Here is the adoption data, who fits, and what the shift means for a broker’s book and compensation.
Level funding, a self-funded structure with stop-loss insurance and fixed monthly payments, has quietly become mainstream in the small-group market. It gives smaller employers self-funded economics (potential refunds in good claims years, federal rather than state benefit mandates) with fully-insured predictability. For brokers, it’s the largest structural shift in the small-group book since the ACA, and it changes both the sales conversation and the compensation model.
Table 1: Funding arrangement by firm size
| Arrangement | Small firms | Large firms | All |
|---|---|---|---|
| Self-funded (all forms) | 27% | 80% | 67% |
| Level-funded (of small-firm covered workers) | 37% | — | — |
| Fully-insured | majority of remainder | minority | ~33% |
The two-thirds/one-third split is the headline: two of every three covered workers in America are now in self-funded arrangements. In the small-group segment specifically, level funding is the vehicle, and at 37% of small-firm covered workers it has crossed from alternative to standard option.
Table 2: Who fits level funding
| Factor | Good fit | Poor fit |
|---|---|---|
| Group size | ~10–200 employees | Under ~5 lives |
| Census health | Average or better | Known high claimants |
| Risk tolerance | Wants refund upside | Wants zero variability |
| State market | High fully-insured rates | Competitive small-group rates |
Table 3: The economics vs. fully-insured
| Dimension | Fully-insured | Level-funded |
|---|---|---|
| Good claims year | Carrier keeps surplus | Employer refund potential |
| Bad claims year | Premium absorbs | Stop-loss caps exposure |
| State premium taxes & mandates | Apply | Largely avoided (ERISA) |
| Broker compensation | Carrier-set % of premium | % or negotiated PEPM |
| Data access | Limited | Claims visibility |
Table 4: What it does to a broker’s book
| Effect | Direction | Why |
|---|---|---|
| Client retention | Up | Refund checks and claims data embed the broker |
| Revenue per group | Neutral to up | PEPM negotiability replaces carrier schedule |
| Renewal defensibility | Up | Annual refund review is a built-in touchpoint |
| Book value at sale | Up | Stickier revenue commands higher multiples |
| Servicing complexity | Up | Underwriting, stop-loss, claims conversations |
Every row but the last is favorable, and the last is the moat: the servicing complexity that makes level funding harder to sell is exactly what makes the client harder for a competitor to poach. A book that shifts its qualifying small groups to level funding is trading a little operational load for retention, negotiated comp, and a higher exit multiple.
Frequently asked questions
- How common are level-funded health plans now?
- Per KFF’s 2025 survey, 37% of covered workers at small firms are enrolled in level-funded plans, and 67% of all covered workers are in self-funded arrangements of some form.
- What size group fits level funding?
- The core market is roughly 10–200 employees with an average-or-better census. Very small groups and groups with known high claimants generally price better fully-insured.
- How does level funding change broker compensation?
- It moves comp from a carrier-set percent of premium toward negotiable structures, including PEPM fees, and adds an annual refund-review touchpoint that strengthens retention.
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Sources & methodology
- Adoption figures: KFF, 2025 Employer Health Benefits Survey (37% of small-firm covered workers level-funded; 67% self-funded overall, 27% small / 80% large firms).
- Fit and economics: standard level-funded underwriting practice and ERISA preemption of state mandates for self-funded arrangements.
- Note on figures: adoption data is KFF primary. Fit profiles and book effects are market practice, presented directionally.