For years, self-funding was viewed as a strategy reserved for large corporations. Today, with stop-loss protection and level-funded options, groups as small as 25–50 employees are taking a serious look.
What self-funding actually means
Instead of paying a fixed premium to an insurer, you pay claims as they occur and purchase stop-loss coverage to cap your risk. When claims run lower than projected, the savings stay with you rather than the carrier.
Signs your group may be a good fit
- A relatively healthy, stable workforce with predictable turnover.
- Enough cash flow to handle month-to-month claims variability.
- A desire for claims data and transparency to drive plan decisions.
- Frustration with double-digit fully-insured renewal increases.
Where the caution flags are
Self-funding rewards employers who can tolerate some variability. If a single bad claims month would create real financial stress, a level-funded arrangement may offer a gentler on-ramp with much of the same upside.
The right funding model isn’t the one that looks best on paper — it’s the one that matches how your business actually manages risk.
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