Calculator
Self-funded vs fully-insured calculator.
Enter the fully insured premium, expected claims, fees and stop-loss assumptions. Compare expected cost, cost at the modeled aggregate attachment and break-even claims without creating an account.
Calculator
Compare fully-insured with self-funded.
Fixed costs are certain; claims are not. Read the expected case and the aggregate cap together.
$517,000
Self-funded at expected claims
$540,000
Fully-insured, annual
$23,000
Expected saving
$617,000
Modeled cost at aggregate attachment
How this is calculated
Administration $40,500 + stop-loss premium $76,500 = $117,000 annual fixed cost. Add $400,000 expected claims for $517,000 total expected cost.
Fixed costs are administration plus stop-loss premium, per employee per month, over twelve months. The expected case adds expected claims to those fixed costs. The worst case replaces expected claims with the aggregate attachment point, which is expected claims at the corridor you entered (125%), because aggregate stop-loss pays claims above that point.
Break-even claims are $423,000: above that, self-funding costs more than the fully-insured premium. At the aggregate cap this group would pay $77,000 more than the fully-insured premium, which is the exposure to weigh.
Excluded: terminal liability, run-in and run-out, lasers, and monthly accommodation timing. An estimate for planning, computed in your browser.
Compare funding approaches
Fully-Insured
Traditional insurance where carrier assumes all risk
Advantages
- +Predictable costs
- +No claims risk
- +Simpler administration
- +State-regulated protections
Disadvantages
- -Higher premiums
- -Less flexibility
- -No claim refunds
- -Limited plan customization
Level-Funded
Hybrid with fixed payments and potential refunds
Advantages
- +Predictable monthly costs
- +Potential surplus refunds
- +Claims data access
- +Some plan flexibility
Disadvantages
- -May pay more if claims are high
- -Stop-loss costs
- -Less customization than ASO
- -Still some risk
Self-Funded (ASO)
Employer pays claims directly with TPA administration
Advantages
- +Lowest costs if claims are low
- +Full plan customization
- +Complete claims data
- +ERISA preemption
Disadvantages
- -Variable costs
- -Claims risk
- -Administrative complexity
- -Cash flow requirements
Decision matrix
| Factor | Fully-Insured | Level-Funded | Self-Funded |
|---|---|---|---|
| Group Size | Fully-Insured | Level-Funded | Self-Funded |
| Risk Tolerance | Fully-Insured | Level-Funded | Self-Funded |
| Cash Reserves | Fully-Insured | Level-Funded | Self-Funded |
| Claims History | High claims = FI | Average = LF | Low claims = SF |
| Plan Flexibility Need | Low = FI | Medium = LF | High = SF |
| HR Sophistication | Limited = FI | Moderate = LF | Advanced = SF |
Self-funded cost components
Fixed costs
- 1Stop-Loss PremiumsSpecific and aggregate coverage
- 2TPA AdministrationClaims processing, network access
- 3Network Access FeesPPO network rental costs
Variable costs
- 1Paid ClaimsActual medical/Rx claims paid
- 2IBNR ReserveIncurred but not reported claims
- 3Run-Out LiabilityClaims from prior plan year
Understanding stop-loss insurance
Specific stop-loss
Protects against high individual claims. Once a single claimant exceeds the specific deductible (e.g., $50,000), stop-loss reimburses the excess.
Aggregate stop-loss
Caps total annual claims. If total claims exceed a predetermined corridor (typically 125% of expected), stop-loss reimburses the excess.
Where this fits in a renewal. This calculator gives the break-even against a fully-insured premium. If level-funded is also on the table, level-funded vs self-funded sets out what actually differs between those two. To test the alternatives in a working copy of a case, with employer and employee cost beside the baseline, see scenario modeling, and use the stop-loss calculator for attachment points. Terms are in the benefits glossary.
Model any funding scenario.
Planlined lets you compare fully-insured, level-funded, and self-funded options side-by-side with accurate contribution modeling.
Frequently asked questions
What is self-funded health insurance?
Self-funded (or self-insured) health plans are where the employer pays for employee health claims directly, rather than paying fixed premiums to an insurance carrier. The employer assumes the financial risk for providing health benefits.
What is the difference between self-funded and level-funded?
Level-funded is a hybrid approach. The employer pays a fixed monthly amount (like fully-insured) but unused claim funds may be returned. It offers more predictability than traditional self-funding while still providing potential savings and plan flexibility.
How many employees do you need for self-funding?
Traditionally, self-funding was for groups of 200+ employees. Today, level-funded options make self-funding accessible for groups as small as 10-25 employees, though risk spreads better with 50+ lives.
What is stop-loss insurance?
Stop-loss protects self-funded employers from catastrophic claims. Specific stop-loss covers individual high claims. Aggregate stop-loss caps total annual claims. Both are essential for managing self-funded plan risk.