Washington small-group rates keep rising
Washington small employers are facing steady double-digit rate increases on traditional fully insured health plans. The Washington Office of the Insurance Commissioner approved an average 12.8% increase for 2026, even higher than the 11.9% approved for 2025. Regence BlueShield, the largest small group insurer in the state, went up 15.4%. And early filings for 2027 point to more of the same.
Sources: Washington Office of the Insurance Commissioner, 2026 small group rates (Nov. 2025); KFF 2025 Employer Health Benefits Survey; Mercer National Survey of Employer-Sponsored Health Plans (Aug. 2026)
What is a level-funded health plan?
A level-funded plan is a hybrid between a traditional fully insured plan and a self-funded plan, designed for small and mid-size businesses. You pay a fixed, predictable monthly amount that covers three parts:
Claims fund
Covers your employees’ actual medical claims.
Stop-loss insurance
Protects you from catastrophic or unexpectedly high claims.
Admin fees
Covers plan administration and third-party administrator services.
Here is the best part: if your employees’ claims come in lower than projected, you may get some or all of the surplus back at the end of the plan year. With a fully insured plan, that money stays with the carrier instead of your business.
We currently quote level-funded plans from UnitedHealthcare, Nationwide and Angle Health, so you can compare more than one carrier’s pricing, network and stop-loss terms side by side.
5 reasons Washington businesses consider level funding
Level-funded plans offer the predictability of fully insured coverage with the cost-saving potential of self-funding.
Escape the rate spiral
Level-funded plans are not subject to ACA community rating rules. Your rates reflect your group’s actual claims history, not the broader market, so healthy groups can pay less.
Possible year-end refunds
If claims come in under budget, your contract may return part of the surplus at year end. Terms vary by carrier, so a refund is possible, not promised.
Stop-loss protection
Stop-loss insurance caps your exposure at both the individual and aggregate level. You get the upside of self-funding without the catastrophic downside risk.
Full claims transparency
Unlike fully insured plans, level-funded plans give you real visibility into your claims data, so you can make smarter benefits decisions at every renewal.
Customizable coverage
Choose from PPO, HDHP, and network-only designs. As self-insured plans, they are exempt from many state benefit mandates, giving you more flexibility in plan design.
Is a level-funded plan right for your business?
Level-funded plans are an ideal fit for Washington employers who:
- Have between 5 and 500 employees
- Have a generally healthy workforce with a manageable claims history
- Are frustrated with annual double-digit fully insured rate increases
- Want cost transparency and visibility into their claims data
- Are open to a more flexible alternative to traditional insurance
- Want stop-loss protection without taking on full self-insurance risk
- Are based anywhere in Washington, from Seattle and Bellevue to Tacoma, Spokane, and beyond
Level funding vs an association-plan renewal
If your plan renews through an association, such as the BIAW Health Insurance Program or AWB HealthChoice, a level-funded quote is one of the options to compare. Level-funded pricing is underwritten on your own group’s census and claims, so it can come in above or below an association renewal. Put it beside a fully insured small-group quote before deciding.
See BIAW health insurance alternatives, plus our guides for construction, manufacturing, landscaping and trucking employers.
Washington Insurance Brokers is an independent broker, not affiliated with or endorsed by BIAW, its local associations, its administrators, or its insurers. We’re an appointed AWB HealthChoice producer, so we can quote it for eligible members, but we aren’t owned by or endorsed by the Association of Washington Business.
How a level-funded plan works, step by step
- Quote and underwriting. The carrier prices your group from an employee census and, depending on the carrier, health questionnaires or recent claims history. Healthier groups usually see the strongest pricing. A carrier can also decline a group or quote it higher.
- A fixed monthly payment. You pay the same amount every month. It funds three things: a claims fund, stop-loss insurance and administration.
- Claims are paid from the claims fund. The carrier or its third-party administrator processes claims much like a traditional plan. Employees get ID cards, a provider network and customer service just as they would with fully insured coverage.
- Stop-loss covers large claims. If one person’s claims or the group’s total claims go past set limits, stop-loss insurance pays the excess. In most designs, you do not owe more than your fixed monthly payments for that plan year.
- Year-end settlement. After the plan year closes and late claims are counted, the carrier compares claims paid to the claims fund. If claims came in lower, some or all of the difference may come back to you as a refund or a credit toward renewal. The share returned and the conditions vary by carrier.
Level-funded vs. fully insured vs. self-funded
All three can cover the same doctors and services. The difference is who carries the risk and what happens to unused money.
| Fully insured | Level-funded | Self-funded | |
|---|---|---|---|
| Monthly cost | Fixed premium | Fixed monthly payment | Varies with actual claims |
| If claims are low | The carrier keeps the difference | Possible refund or renewal credit; terms vary | The employer keeps the savings |
| If claims are high | The carrier absorbs them | Stop-loss pays claims above the limits | The employer pays, up to its stop-loss limits |
| How rates are set | Small group community rating | Your group’s own health and claims profile | Your group’s own claims |
| State benefit mandates | Apply | Generally do not apply; federal rules still do | Generally do not apply; federal rules still do |
| Usually suits | Any size, especially groups with high or unpredictable claims | Small and mid-size groups with a generally healthy workforce | Larger groups that can carry more risk |
For a deeper comparison, read level-funded vs. fully insured health plans for Washington employers.
Trade-offs to weigh before you switch
Level-funded plans are not right for every group. These are the questions we walk through with every employer before recommending one:
- Renewals follow your claims. A year with a few large claims can raise next year’s price, sometimes more than a fully insured renewal would.
- A refund is possible, not promised. Some carriers return only part of the surplus, pay it as a credit, or require you to renew to receive it.
- Leaving takes planning. Claims incurred before you leave can arrive months later. Ask how run-out claims are handled and whether any refund is forfeited if you move to another plan.
- You become the plan sponsor. A level-funded plan is generally a self-funded plan under federal law (ERISA), so plan documents, notices and privacy rules matter. The carrier or administrator handles most of this, and we help you keep track of the rest.
- Underwriting can say no. A group with recent large claims may not qualify, or may be priced above its fully insured options.
Level-funded plan questions
How many employees do we need for a level-funded plan?
Minimum group size varies by carrier and by the number of employees who enroll. We quote UnitedHealthcare, Nationwide and Angle Health; tell us your headcount and we will show you which of their level-funded options your group qualifies for.
Will our employees notice a difference?
Usually very little. Employees get ID cards, a provider network and member services as they would with a traditional plan. The main changes are behind the scenes in how the plan is funded.
What happens if our claims are higher than expected?
Stop-loss insurance pays claims above the plan’s limits, so in most designs you do not owe more than your fixed monthly payments for that plan year. A high-claims year can, however, lead to a higher renewal.
Do Washington insurance mandates apply to level-funded plans?
Level-funded plans are generally self-funded plans governed by federal law, so many Washington state benefit mandates do not apply to them. Federal requirements, such as the Affordable Care Act’s preventive care rules, still apply. We review exactly what a proposed plan covers before you decide.
Can we go back to a fully insured plan later?
Yes. Small employers can return to the fully insured small group market at renewal. Plan the timing around run-out claims and any refund conditions so nothing is left on the table.
The trend is clear: small businesses are moving
Washington small businesses are hit especially hard by rising fully insured premiums. The National Federation of Independent Business says that for over 40 years, the cost of health care has been the number one problem facing small businesses. Level-funded plans are one way employers are taking back control.
Questions about level-funded plans?
Talk with Brandon Hoobler, founder of Washington Insurance Brokers and a licensed Washington insurance broker (WA OIC #824207), working in insurance since 2009. Call (206) 653-9636 or request a quote.
Talk to a Washington benefits expert
Get a no-obligation level-funded plan analysis
We will review your current plan, run the numbers, and show you what a level-funded plan could save your Washington business, at no cost or obligation.
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