If you are a small business owner in California, chances are your health insurance renewal feels the same every year—another increase, with very little explanation or control.

Many employers assume their only option is a traditional small group health insurance plan. But that is no longer the case.

Level-funded health insurance and self-funded captive plans are now available to groups as small as 10 employees, giving small and mid-sized businesses more flexibility, potential savings, and control over their healthcare costs.

What Is Level-Funded Health Insurance?

Level-funded health insurance is a hybrid between fully insured and self-funded plans.

For small businesses, this means:

• A predictable monthly payment (just like a traditional plan)

• The opportunity to receive money back if claims are lower than expected

• Protection against large or unexpected claims

• More flexibility than standard small group plans

Unlike traditional small group health insurance in California, which is age-banded and increases annually regardless of usage, level-funded plans allow your actual claims experience to play a role in your costs.

That can make a significant difference over time.

Why Level-Funded Plans Are Growing in California

In today’s market, many small businesses are seeing annual increases of 10–20% on fully insured plans.

Because of this, more employers are exploring level-funded health plans as a way to:

• Reduce long-term healthcare costs

• Gain more transparency into claims

• Move away from unpredictable rate increases

• Access broader provider networks in some cases

The biggest shift we are seeing is accessibility. What used to be an option only for larger companies is now available to businesses with as few as 10 employees.

What Is a Self-Funded Captive Health Plan?

A self-funded captive is a more advanced strategy where multiple employers join together to share risk and this is better for employers of 80 or more employees.

For California employers, this can offer:

• Greater stability over time

• Reduced volatility compared to going self-funded alone

• Potential long-term savings

• Increased insight into healthcare spending

Captive health insurance plans are typically best suited for employers who want a more strategic, long-term approach to managing benefits rather than reacting to annual renewals.

Level-Funded vs. Small Group Health Insurance

When comparing level-funded plans to traditional small group plans in California, there are a few key differences:

Small Group (Fully Insured):

• Rates are based on age bands

• Limited flexibility

• Consistent annual increases

• No opportunity for refunds

Level-Funded Plans:

• Based partially on your group’s claims

• Potential for surplus refunds

• More plan design flexibility

• Built-in protection against large claims

Both options have their place, which is why it is important to review them side-by-side each year.

Do You Need a Large Broker to Offer Level-Funded Plans?

A common misconception is that only large national firms like HUB International or Marsh McLennan can offer level-funded or captive health insurance solutions.

That is not true.

What matters is not the size of the agency—it is their experience and relationships.

A Boutique Approach with Advanced Expertise

As a California-based health insurance agency, we specialize in:

• Level-funded health insurance plans

• Self-funded and captive strategies

• Small group health insurance comparisons

• Employer benefit consulting

We are top producers with most major insurance carriers in California, which allows us to bring competitive options and strong underwriting support to our clients.

At the same time, we maintain a boutique, high-touch approach—meaning you get personalized guidance, faster response times, and a team that truly understands your business.

Is Level-Funded Health Insurance Right for Your Business?

If you are a small or mid-sized business in California with 10 or more employees, it is worth exploring whether a level-funded or captive health plan could be a fit.

Even if you ultimately stay with a traditional small group plan, having a clear comparison ensures you are making the most informed decision possible.

Final Thoughts on Health Insurance Options for California Employers

Health insurance is one of the largest expenses for most businesses, yet many employers feel like they have no control over it.

That is changing.

With level-funded health plans and captive options becoming more accessible, small businesses now have more tools than ever to manage costs and improve their benefits strategy.

The key is working with a partner who understands all of your options—and can guide you through them clearly.