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Level Funding

Smaller employers deserve the opportunity to self-fund, too.

MedCost has been helping employers with self-funded benefit solutions for over 30 years, but typically, only larger employers have been able to take advantage of the benefits of a self-funded health plan. With MedCost Level Funding, small to mid-sized employers can experience the potential savings, clinical oversight, and greater visibility into plan expenses associated with self-funding at a predictable monthly cost.

Why MedCost Level Funding?

Greater Opportunity for Money Back – Unlike many other level funding plans, MedCost refunds 100% of any unused claim funding surplus to the employer if annual medical claims are lower than expected.1 MedCost also offers an enhanced pharmacy savings strategy with our preferred PBM partners that provides additional member and health plan savings while refunding 100% of any unused pharmacy rebates to the employer, too.1

Care Strategies for Positive Health and Financial Outcomes – MedCost's efficient and individualized approach to care makes the difference in both member health and savings for your health plan. Our Care Management programs consistently deliver strong outcomes in value, improved health and member satisfaction. And, MedCost is the only payor that includes embedded virtual programs from Atrium Health as part of Level Funding (available to members in all 50 states).

How does MedCost Level Funding work?

MedCost Level Funding combines the best features of fully insured and self-funded plans. Like fully insured plans, level funding offers a predictable monthly payment and limited financial risk. And, like self-funded plans, level funding offers savings when claims costs are lower than expected and detailed monthly reporting to help better understand utilization of health services and cost drivers. 

A personalized annual claims reserve amount is calculated based on selected plan design(s), number of enrolled employees, and employee health claims history and demographics.


A predictable monthly fee is determined to fund the annual claims reserve amount and pay administrative fees and stop-loss insurance premiums. This monthly fee will not fluctuate because of the plan’s claims activity.


Covered medical and pharmacy expenses are paid from the annual claims reserve.


If medical and pharmacy claims exceed the maximum funded amount, the stop-loss carrier will pay the excess.

If medical and pharmacy claims are lower than expected, 100% of any unused money left in the annual claims reserve at the end of the stop loss contract period is refunded to the employer.1

  1. Surplus will be returned to the employer (1) as a credit against future month expenses if still a client of MedCost or (2) after acknowledgment of the tax and ERISA considerations for the receipt of that surplus. If an employer group is terminated for non-payment or does not provide 90 days advance notice of termination, MedCost reserves the right to retain any or all of the surplus amount and pharmacy rebates will be forfeited. Should an employer choose to terminate before 3 years with MedCost, MedCost reserves the right to retain surplus/rebates up to a maximum of the employer’s last 12 months of administrative fees.