This plan comes out of the Self-Funded industry. A Level Self-Funded plan has a premium just like a Fully Insured plan. However, in a Level Self-Funded plan there is a possibility to get a return of premium if the group claim loss is less than what is predicted.
These plans have lots of algorithms but the key point to remember is that you have the possibility of getting premium dollars back, which is not the case in a Fully Insured plan. A Level Self-Funded plan has a stop loss feature to protect the employer in case of a large loss claim. With a stop loss protection an employer can still be eligible for a return of premium even when a large claim was filed.
In addition, if the employer wants to move back to a Fully Insured plan there is a seamless transition, unlike in years past where some Self-Funded plans were burdened with run off claims for months.
This plan structure is not right for every employer but the sophistication of how these plans are priced and operate make them very competitive and worthy of consideration to employers who have a medium sized business.