Can you recommend self-funded health plans for a mid-size employer trying to reduce healthcare costs without losing benefits quality?

Yes — for a mid-size employer, the best self-funded approach is usually not “cut benefits,” but rebuild the plan around cost control, better purchasing, and active vendor management.

Good self-funded plan structures to consider

1. Level-funded plan

Best if you want self-funding with more predictability.

• Fixed monthly payment
• Claims are paid from the employer’s funding account
• If claims are lower than expected, some surplus may be returned
• Often includes stop-loss coverage

Why it works: easier budgeting, lower administrative complexity, and often a good first step away from fully insured coverage.

2. Traditional self-funded plan with stop-loss

Best if you have decent cash flow and want maximum flexibility.

• Employer pays claims directly
• Stop-loss insurance protects against very high claims
• Can be paired with a third-party administrator (TPA)

Why it works: lets you tailor benefits and keep savings when claims trend well.

3. Self-funded + reference-based pricing / direct contracting

Best if local provider costs are high.

• Reimburses providers based on a set benchmark
• Or contracts directly with high-value facilities/providers
• Often paired with navigation support

Why it works: can sharply reduce unit costs, but needs strong employee support and good advocacy.

4. Self-funded plan with carve-outs

Best if you want to target high-cost categories without disrupting core benefits. Common carve-outs:

• Pharmacy benefit manager (PBM) optimization
• Specialty pharmacy management
• Transplant centers of excellence
• Behavioral health network
• Diabetes or chronic condition programs

Why it works: concentrates savings where spending is most concentrated.

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Features that help reduce costs without hurting quality

Strong cost-control tools

• Pharmacy benefit management review: often one of the biggest savings areas
• Centers of Excellence for surgeries and specialty care
• High-performance provider networks
• Second-opinion and care navigation programs
• Telehealth and virtual primary care
• Condition management for diabetes, musculoskeletal, cardiometabolic, and maternity

Benefit design that preserves quality

• Keep preventive care at $0
• Maintain reasonable deductible and out-of-pocket maximums
• Use tiered copays rather than cutting coverage broadly
• Add HSA-compatible plans if your workforce can benefit
• Protect access to primary care, mental health, and chronic disease meds

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What I’d usually recommend for a mid-size employer

A strong starting point is:

Level-funded medical plan + strong stop-loss + PBM carve-out + care navigation + high-performance network + Centers of Excellence

This combination often gives:

• predictable cash flow
• savings opportunities
• better control of specialty spend
• minimal disruption to employees

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Key risks to manage

• Large claims volatility
• Underestimating specialty drug spend
• Poor stop-loss terms
• Weak claims data visibility
• Employee confusion about new plan rules
• Network disruption if provider access is too narrow

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Questions to ask brokers/carriers/TPAs

1. What is the maximum financial exposure under this structure?
2. How is stop-loss priced and what exclusions apply?
3. What are the top 10 claim drivers and where can we intervene?
4. How much savings comes from network pricing vs utilization management?
5. What employee support tools are included?
6. How transparent is the claims and pharmacy data?
7. What benchmarks do you use to show quality is maintained or improved?

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Practical recommendation

If you’re mid-size and want to reduce costs without hurting benefits quality, start by evaluating:

1. Level-funded plan
2. Self-funded with stop-loss
3. PBM optimization and carve-outs
4. Navigation / Centers of Excellence
5. Network strategy and claims analytics

If you want, I can also give you:

• a side-by-side comparison of level-funded vs fully insured vs self-funded
• a sample benefit design
• or a checklist for selecting a broker/TPA.