Stress TestMedical Loss Ratio
70%
Good Year

You're paying your premium this year. Here's where it actually goes.

There are five ways to buy health insurance. Most employers only know one.

There's also a sixth path where you don't buy a group plan at all — you fund employees to buy their own. It's the last slide →  ·  The ICHRA walkthrough, in plain English →

Your Plan Numbers

Enter your information once — it flows into every funding model.

★ $9,500–$10,000 is typical for most mid-market employers.
70%
Rx Rebate Estimate

25% of pharmacy spend (industry benchmark — could be more or less)

Annual Premium
$950,000
Monthly Premium
$79,167
Per Employee / Month
$792
Expected Annual Claims
$665,000
Est. Rx Rebates Available
$77,805
These numbers will flow into each funding model so you can compare apples to apples.

Fully Insured

The default. Fixed premium. No upside. No visibility.

Where your money goes each month
You Pay
$79,167
fixed monthly
→
Carrier
?
black box

You pay a fixed premium. The carrier decides how to allocate it. You don't see claims data, margin, or how your money is spent.

12-Month Cash Flow

Same cost every month. Good year or bad year — you pay the same.

Rx Rebates
$77,805
retained by carrier — you never see this money
Surplus in a Good Year
$0 back
carrier keeps 100% of surplus — no refund, no credit
Annual Cost — Any Year
GOOD YEAR
$950,000
BAD YEAR
$950,000

Identical. No upside. No downside protection beyond premium.

Maximum Annual Exposure= Annual Premium
Carrier owns claim risk above premium.
$950,000
Your Control
Data
Rx/PBM
Network
Plan Design
Surplus
You're funding the plan — but someone else controls it, profits from it, and keeps the upside.

What if you could see inside the box? →

Carrier "Level Funded"

A step toward transparency — but the carrier still wins.

Where your money goes each month
You Pay
$79,167
fixed monthly
→
Claims Fund
$47,500
~60%
Admin
$11,875
~15%
Stop-Loss
$7,917
~10%
Margin
$11,875
~15%
12-Month Cash Flow + "Month 13"

Fixed monthly — but if claims run low, a partial refund may come back.

Rx Rebates
$77,805
still retained by carrier — even in "level funded"
Surplus Split (Good Year)
CARRIER KEEPS (60%)
$85,500
YOU GET (40%)
$57,000

Your employees drove the good result. The carrier keeps the majority.

Annual Net Cost
GOOD YEAR
$893,000
BAD YEAR
$950,000

Capped on the downside, but limited upside — and no Rx rebates.

Maximum Annual Exposure= Annual Premium
Same as FI — carrier absorbs claim overruns.
$950,000
Your Control
Data
Rx/PBM
Network
Plan Design
Surplus
Better visibility than FI — but the carrier still controls the PBM, keeps the rebates, and takes most of the upside.

What if you kept 100% of the surplus — and the rebates? →

True Level Funded

Fixed monthly cost. Surplus comes back to you. You own the data.

Where your money goes each month
You Pay
$79,167
fixed monthly
→
Claims Fund
$55,417
~70%
TPA Admin
$7,917
~10%
Stop-Loss
$7,917
~10%

No carrier margin. More goes to claims. You choose the TPA, PBM, and stop-loss carrier.

12-Month Cash Flow + Full Surplus Return

Fixed monthly — and 100% of surplus comes back to you.

Rx Rebates
$77,805
100% back to you — direct PBM contracts, your rebates
Surplus (Good Year)
$142,500
100% back to you — no carrier split
Annual Net Cost
GOOD YEAR
$729,695
BAD YEAR
$950,000

Capped on downside. Full upside in good years. Plus Rx rebates.

Maximum Annual Exposure= Annual Premium
Fixed cost. Carrier still absorbs catastrophic overruns.
$950,000
Your Control
Data
Rx/PBM
Network
Plan Design
Surplus
Direct PBM Contracts100% RebatesChoose Your TPAShop Stop-Loss
Same fixed monthly payment as FI — but you control it, you see everything, and you keep everything.

What if you only paid what you actually used? →

Self-Funded

Pay actual claims. Keep the savings. Own everything.

Where your money goes each month
You Pay
Variable
claims as incurred
→
Claims
Actual
pay what you use
TPA
$6,333
~8%
Stop-Loss
$7,917
protection
12-Month Cash Flow — Variable + Reimbursement

Monthly cost varies with claims — but stop-loss reimburses large claims back to you.

When a Big Claim Hits — Stop-Loss Protection
🏥
Employee has $300K claim
💰
Your plan pays $300K — claims flow as incurred
🛡️
Specific stop-loss at $75K — claim exceeds threshold
✅
Stop-loss reimburses $225K — your net cost: $75K

Aggregate stop-loss also caps your total annual exposure. You're never unprotected.

Rx Rebates
$77,805
100% yours — direct PBM contracts, full transparency
Good Year Savings
$207,805
you just pay less — no "surplus" to split, the savings are automatic
Annual Net Cost
GOOD YEAR
$664,195
BAD YEAR (MAX)
$950,000
capped by aggregate stop-loss

Bad year capped by aggregate stop-loss. Good year = you just pay less.

Maximum Annual Net Exposure125% premium cap − Rx rebates
Hard ceiling. Cannot exceed regardless of MLR. Rx rebates flow in both good and bad years.
$1,187,500 gross cap
−$77,805 Rx rebates
$1,109,695
Net Max Risk
How the Protection Actually Works
Specific Stop-Loss · per individual
When one person has a catastrophic claim
$400,000 cancer claim
$75K plan pays
$325K stop-loss covers
Plan exposure capped at $75K on any single individual. Stop-loss reimburses everything above the spec deductible.
Aggregate Stop-Loss · whole plan
When the year overall runs hot
$1.4M total claims (vs $1M expected)
$1.25M plan pays
$150K agg covers
Plan exposure capped at 125% of premium. Aggregate stop-loss reimburses everything above the corridor — for the whole year.
Two layers of protection. Spec catches the catastrophic individual. Agg catches the catastrophic year. Your downside has a floor and a ceiling — no matter what happens.
Your Control
Data
Rx/PBM
Network
Plan Design
Surplus
100% RebatesDirect ContractsStop-Loss ProtectedFull DataShop Everything
You pay what you use. Stop-loss protects you from catastrophic claims. Everything else stays with your organization.

What if you added shared strength and ownership on top? →

Stop-Loss Live

Adjust your spec deductible and headcount. Then trigger claims and watch how spec and aggregate stop-loss actually protect the plan.

Specific Deductible$75K
$50K$200K
Employees100
50300
Aggregate Corridor125%
Industry-standard hard ceiling on the plan's annual exposure. Fixed by stop-loss carriers.
Laser Example
Laser amount$250K
$100K$500K
One employee gets a higher individual spec deductible. Carrier's way of saying "we'll cover the group, but this person's first $X is on you."
ProtectedNo additional plan risk for this year
Spec line · $75K
50 employees · all visible 0 claims triggered
Total Claims
$0
Plan Pays
$0
Spec Recovers
$0
Agg Recovers
$0
Cumulative · approaching agg ceiling
Less than 1% of self-funded plans ever cross this line
$0 of $1,250,000
Spec catches the catastrophic individual. Agg catches the catastrophic year. Your downside has a floor and a ceiling — no matter what happens.

Self-Funded + Captive

Self-funded — with a group of employers who think like you do.

Where your money goes each month
You Pay
Variable
claims as incurred
→
Claims
Actual
pay what you use
TPA
$6,333
~8%
Captive Pool
$7,917
stop-loss + pool
12-Month Cash Flow — Same as Self-Funded

You still pay claims as they come — variable month to month, stop-loss protected. Same mechanics as SF.

What Makes the Captive Different
🏛️
Your stop-loss goes into a shared captive pool with other employers
📊
Pool shares risk — one employer's bad year is absorbed by the group
💰
If the pool performs well → dividends come back to member employers
🔑
You own a piece of the captive — it's an asset, not just insurance
Rate Stability — Captive vs Market
Market Stop-Loss
8–25%
annual rate swings
Captive
3–8%
stable, predictable
Rx Rebates
$77,805
100% yours — same as self-funded
Good Year Savings
$207,805
claims savings + Rx rebates
+ Marginal Captive Bonus
1–3% of premium typical
small additional savings from pool participation — not the main story
Annual Net Cost
GOOD YEAR
$630,945
BAD YEAR (MAX)
$950,000
capped by aggregate + captive pool
Maximum Annual Net Exposure125% premium cap − Rx rebates
Same hard cap as Self-Funded. Captive pool doesn't change the corridor.
$1,187,500 gross cap
−$77,805 Rx rebates
$1,109,695
Net Max Risk
Your Control
Data
Rx/PBM
Network
Surplus
Ownership
100% RebatesDirect ContractsCaptive DividendsOwnership StakeRate Stability
Everything self-funded offers — plus pooled risk, rate stability, dividend potential, and you own a piece of the structure.

Side by Side

All five models. Your numbers. One table.

Fully Insured
Carrier LF
True LF
Self-Funded
SF + Captive
Good Year Cost
Bad Year Cost
Surplus Returned
$0
Automatic
Auto + Dividend
Rx Rebates
-$78K
-$78K
+$78K
+$78K
+$78K
Data Visibility
None
Limited
Full
Full
Full
PBM / Rx Control
None
None
Direct
Direct
Direct
Stop-Loss
N/A
Carrier
You Shop
You Shop
Captive Pool
Renewal Control
None
Some
High
Highest
Highest
Ownership
No
No
No
No
Yes
The further right you go, the more control, visibility, and upside your organization retains.
🔍
Told you had a bad year?
Let's check. See what your carrier's number looks like after pooling and rebates. →
The Question That Matters
You just saw your numbers in five funding structures — side by side, same assumptions, same math.
Has anyone ever shown you this before?
Most employers see one option at renewal. One number. One carrier. No comparison. No spectrum. If this is the first time you've seen your plan this way — that tells you something about the conversation you've been having. And the one you haven't.
The Next Question
These are benchmarks. Your plan has specific claims, specific cost drivers, specific history. Which path is actually right for you?
The only way to answer that is to look at your actual data — not benchmarks. That's where the real conversation starts.
The companies that figured this out five years ago are paying less today.

The Sixth Way: ICHRA

No group plan at all. You fund a fixed monthly allowance; employees buy their own coverage; you reimburse tax-free. The renewal letter stops arriving.

Your allowance, your number

Set the allowance as a share of what you spend per employee today. Most employers land between 60% and 85% of current PEPY — the individual market prices a benchmark silver plan below most group rates for younger employees and above it for older ones, which is why allowances are age-banded.

Allowance / employee / month
$630
Employer annual, fixed
$756,000
vs. $1,000,000 today — and the number is the number: no claims exposure, no bad year, no surplus either. Add roughly $20 PEPM for administration.
Good year vs. bad year
Good year
$756,000
Same. The individual carrier keeps the surplus.
Bad year
$756,000
Same. A $500K claimant is the carrier's problem, and it can't follow you into next year's number.
What you're actually deciding
Classes. Who gets what — full-time, part-time, salaried, hourly, by state. Same offer within a class; allowance can vary by age (3:1 cap) and family size.
Affordability becomes yours. For each employee, allowance vs. the lowest-cost silver plan in their county vs. 9.96% of household income (2026). Rural counties often run 15–25% above the metro. Fail it and the employee can take the tax credit instead — and you may owe a penalty if you're an ALE.
The 90-day notice. Written notice before the plan year. A January 1 start means a decision by the end of September.
What employees take on. Shopping once a year, narrower networks (HMO/EPO are common in the individual market), attestation, proof of coverage. Some will love it. Some will need help. Their side of it, in plain English →
When it fits · when it doesn't
Fits
Multi-state or remote workforces · groups that keep getting re-rated on one or two claimants · employers who want a defined contribution they can budget · younger, metro-heavy census · a strong individual market in the county
Doesn't
A county with one individual carrier and a thin network · an older census where age-banded allowances get expensive fast · a workforce that won't shop · an employer who values the group plan as a retention story · a September that's already over
Risk · Control · Predictability · Cost
1/5
Risk
2/5
Control
5/5
Predict.
5/5
Cost shape

Lowest risk and highest predictability of the six. Least control over networks and plan design — those belong to each employee now. Not a recommendation: a description of the trade.

Employer-side detail: the ICHRA walkthrough →
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