Series
The Architecture of Level Funded
Level funded feels like a premium and behaves like self-funding. The architecture that makes that possible involves three financial instruments, a statutory preemption framework that traces to 1974, and five parties whose incentives do not fully align. This series maps the full structure: how the money moves, who owns what, what happens at reconciliation, and where the transparency gaps the industry consistently understates.
LFP-01.01
The Mechanics of Level Funded: How the Money Actually Moves
The employer pays one check. That check splits into a claims fund the employer owns, a stop loss premium the carrier holds, and an administrative fee the TPA earns. Following each …
LFP-01.02
Level Funded, Fully Insured, Self-Funded: Three Architectures, Not Three Products
Calling level funded a midpoint between fully insured and self-funded obscures who owns the risk, who owns the data, and what happens to the surplus. Level funded is structurally …
LFP-01.03
The ERISA Foundation: Why Self-Funded Plans Exist Outside State Insurance Law
ERISA preemption rests on three interlocking statutory provisions: a broad supersession rule, a savings clause that preserves state authority to regulate insurance, and a deemer …
LFP-01.04
How Level Funded Got Here: The ACA, the Small Group Market, and Regulatory Arbitrage
Level funded is regulatory arbitrage made operational. The ACA applied community rating to fully insured small groups; ERISA preserved health-status underwriting for self-funded …
LFP-01.05
Surplus, Deficit, and Reconciliation: What Happens When the Plan Year Ends
Surplus return terms range from 100 percent to zero depending on the contract, and that variation is the diagnostic test for whether a level funded plan is self-funded in economics …
LFP-01.06
Who Touches the Money: TPA, Stop Loss Carrier, Reinsurer, Employer, and Broker
Five parties have financial relationships in a level funded arrangement: the employer, the TPA, the stop loss carrier, the reinsurer, and the broker. Each is compensated …
LFP-01.07
Structural Advantages, Structural Vulnerabilities, and the Transparency Divide
Level funded's advantages over fully insured are genuine: surplus potential, claims data access, plan design flexibility, ERISA preemption savings. Its vulnerabilities are equally …
LFP-01.TD1
Glossary of Level Funded Terms
The plan documents use precise terms that mean something specific in the level funded context: lasers, corridors, run-out periods, PMPM rates, NQTLs, PCORI fees. The definitions …