🔒 Licensed Texas Broker — TDI License #1816327 | Serving TX Employers Since 2010
Self-Funded Health Insurance for Texas Employers (2026)
The structure used by 65% of U.S. workers with employer coverage. Assume direct claims responsibility, eliminate carrier profit margins, and keep the savings — with stop-loss to cap your risk.
15–30%Avg first-year savings vs. FI
65%of U.S. covered workers on self-funded plans
100+Employees — traditional ASO sweet spot
ERISAGoverned — state mandate exempt
How Self-Funded Health Insurance Works
The employer becomes the plan. Claims flow through your account, not a carrier’s. You keep the underwriting profit when your population is healthy.
🏦
Claims Reserve Account
Rather than paying premiums to a carrier, you fund a claims account. Employee claims are paid directly from this account as they occur. Unused reserves remain yours — no year-end reconciliation with a carrier.
⚙️
Third Party Administrator (TPA)
A TPA handles claims adjudication, network access, member services, pharmacy benefit management (PBM), and monthly reporting. You pay a fixed per-employee-per-month (PEPM) admin fee. The TPA has no financial interest in your claims.
🛡️
Stop-Loss Insurance
Specific stop-loss caps your per-member annual liability (typically $50K–$200K). Aggregate stop-loss caps your total group claims for the year (typically 120–125% of expected). Above those thresholds, the stop-loss carrier pays — your exposure is capped and predictable.
Self-Funded vs. Level Funded vs. Fully Insured
Annual cost per employee for a representative 200-employee Texas manufacturer. 2025 data.
* Annual cost per covered employee including stop-loss premium and TPA fees. Based on representative 200-employee Texas manufacturer, 2025 plan year. Excludes wellness program savings.
Where the Savings Come From
Carrier Margin
Eliminated
Eliminated
The insurer’s profit
stays with you
stays with you
ERISA Preemption
State mandates don’t
apply to self-funded
apply to self-funded
PBM Optimization
Independent pharmacy
contracting saves
contracting saves
Wellness ROI
You own the data;
interventions pay off
interventions pay off
Who Self-Funding Is Built For
Self-funding rewards sophistication, scale, and population health discipline. Here’s exactly who wins — and who shouldn’t consider it yet.
✅ 100–500 Employees
The traditional ASO sweet spot. Large enough to achieve meaningful claims diversification without reinsurance dependency. Stop-loss pricing is competitive at this scale. Groups 200+ typically see the most favorable stop-loss terms.
✅ Stable, Low-Turnover Workforce
Self-funding rewards employers with consistent populations. High-turnover environments make claims trend analysis unreliable and underwriting conservative. Stable workforces build multi-year claims histories that optimize stop-loss pricing.
✅ Employers With Claims Data
If you’ve been on a fully insured plan with limited data visibility, self-funding immediately gives you complete claims transparency. Use it to identify high-cost conditions early, target care management, and measure wellness program ROI precisely.
✅ Multi-State Texas Employers
ERISA preemption means your self-funded plan operates under a single set of federal rules regardless of which states your employees are in. No need to comply with varying state insurance mandates — a significant administrative and cost advantage for multi-state operations.
✅ Employers Paying ACA Community Rates
If you’re a 51–250 employee employer paying ACA large group fully insured rates with a healthy workforce, you’re likely subsidizing the broader risk pool. Self-funding lets you price to your own population — not the community average.
✅ Long-Term Benefits Strategy Mindset
Self-funding rewards a 3–5 year horizon. Year 1 may show modest savings; years 3–5 with accumulated data, optimized vendor contracts, and population health programs consistently produce 25–40% cumulative savings vs. staying fully insured.
⚠️ Under 50 Employees — Not Yet
True ASO self-funding is risky at this size — insufficient claims diversification means one catastrophic case can dominate results. Level funded plans (a structured form of self-funding with fixed monthly costs) are the appropriate entry point for groups under 50.
⚠️ High-Risk Clinical Population
Employers with known high-cost chronic conditions in the workforce (dialysis, oncology, transplant) will find stop-loss carve-outs or elevated stop-loss premiums that erode savings. Fully insured guaranteed issue is the appropriate structure for these groups.
Self-Funding by Group Size — Honest Assessment
The right structure varies significantly by headcount. Here’s where self-funding fits across the spectrum.
| Group Size | Recommended Structure | Self-Funding Viability | Key Consideration |
|---|---|---|---|
| 1–9 employees | Fully Insured ACA Small Group | Not recommended | Guaranteed issue protection is essential; claims variance too high for any self-funding structure |
| 10–49 employees | Level Funded | Level funded only | Fixed monthly payments with stop-loss provide self-funding benefits with cost predictability. Not true ASO. |
| 50–99 employees | Level Funded or ASO | Emerging viability | ASO starts to become viable with disciplined stop-loss. Still significant variance risk; evaluate carefully. |
| 100–249 employees | Self-Funded ASO | Strong fit | Sweet spot for first-time self-funders. Adequate claims volume for meaningful trend data. Competitive stop-loss pricing. |
| 250–999 employees | Self-Funded ASO | Optimal | Sufficient scale for claims diversification, direct PBM contracting, and robust care management program ROI. |
| 1,000+ employees | Self-Funded + Direct Contracting | Maximum leverage | Can consider direct hospital contracts, on-site clinics, reference-based pricing, and specialty carve-outs for maximum savings. |
Texas Employer Case Studies
Three self-funded transitions across different industries, sizes, and outcomes. Including one where it didn’t outperform expectations in year one.
Manufacturing · DFW
Precision Parts Manufacturer — 210 Employees
Prior fully insured annual cost$3.28M
Self-funded year 1 cost$2.47M
TPA admin + stop-loss$312K
Stop-loss specific threshold$75K/member
Year 1 savings$810,000
Year 3 savings (with wellness)$1.14M/yr
💡 Primarily male workforce aged 32–52 with low chronic disease burden. PBM rebates recovered $88K in year 1. Onsite biometric screening in year 2 identified 14 pre-diabetic employees for intervention — avoided an estimated $280K in future claims by year 3.
Professional Services · Austin
Engineering Consulting Firm — 145 Employees
Prior fully insured annual cost$2.18M
Self-funded year 1 cost$1.89M
TPA admin + stop-loss$228K
Stop-loss specific threshold$60K/member
Year 1 savings$290,000
Stop-loss activated?Yes — 1 member ($91K)
💡 One employee with a cardiac event exceeded stop-loss threshold — the carrier covered $31K above the $60K cap. Despite this, the group still achieved 13.3% savings vs. prior fully insured premium. Claims data revealed high ER utilization for non-emergency visits; telemedicine promotion in year 2 reduced ER spend 22%.
Retail / Distribution · Houston
Regional Distribution Company — 380 Employees
Prior fully insured annual cost$5.92M
Self-funded year 1 cost$5.81M
TPA admin + stop-loss$580K
Stop-loss specific threshold$100K/member
Year 1 savings$110,000
Year 2 savings (after PBM rebid)$890,000
⚠️ Modest year 1 savings due to two high-cost specialty pharmacy cases and elevated stop-loss premium from prior claims. Year 2 turned dramatically after competitive PBM rebid and specialty drug management program. Lesson: self-funding rewards patience — year 1 is rarely the peak performance year.
Self-Funded Plan Carriers — Texas (2026)
Carriers offering ASO, level funded, and hybrid self-funded products for Texas employers.
BCBSTX
ASO min: 51 employees
Largest Texas network. ASO product gives self-funded access to BCBSTX PPO/HMO networks with full claims transparency. Level funded available at 2+ employees.
UnitedHealthcare
ASO min: 51 employees
Full ASO suite including Choice Plus and Options PPO networks. All Savers for level funded (5+). Surest (no-deductible model) for 51+. Strong analytics and care management.
Aetna
ASO min: 51 employees
Robust ASO platform with integrated pharmacy (CVS Caremark) and detailed claims analytics. Funding Advantage for level funded groups 5+. Strong care management programs.
Cigna (Evernorth)
ASO min: 51 employees
ASO product with Express Scripts PBM integration. Strong behavioral health and specialty management. Good for employers prioritizing mental health parity and pharmacy cost containment.
Sana Benefits
Min group: 5 employees
Modern self-funded platform built specifically for small and mid-size businesses. Transparent pricing, zero-cost primary care, strong member app. Best for tech-forward employers.
Arlo Health
Min group: 5 employees
Texas-focused self-funded carrier emphasizing cost transparency and direct primary care. Competitive for small employers entering self-funding for the first time.
Third Party Administrators (TPAs) — Texas
For employers who want to self-fund with an independent TPA rather than a carrier’s ASO product — giving you full network and vendor flexibility.
Meritain Health (Aetna subsidiary)
One of the largest independent TPAs in the U.S. Access to Aetna’s national network with TPA flexibility. Strong reporting and care management. Good for 100–1,000 employee Texas groups.
HealthSmart
Texas-based TPA with one of the largest proprietary PPO networks in the state. Strong regional hospital and physician contracts. Competitive for Texas-centric employers who don’t need national coverage.
Imagine360
Reference-based pricing TPA that replaces traditional network contracts with Medicare-based repricing. Potential for 20–40% hospital cost savings vs. traditional PPO. Best for employers 200+ willing to manage member advocacy.
Zelis Healthcare
Specializes in claims payment integrity and network solutions. Often used as a claims repricing overlay on top of existing TPA arrangements to identify overbilling and reduce unit costs.
Trustmark Small Business Benefits
Rare TPA that serves groups as small as 2 employees with self-funded products. Level funded structure with TPA administration. Good for small Texas employers who want self-funded economics without minimum size barriers.
Allied National
Flexible self-funded administration for small to mid-size Texas groups. Specialty in non-traditional industries and workforces with mixed employment arrangements. Competitive stop-loss partnerships.
Self-Funded Health Insurance — FAQ
Questions from Texas HR directors and CFOs who’ve evaluated self-funding.
BasicsWhat is the difference between self-funded and level funded?
Level funded is a structured form of self-funding with fixed monthly payments that make cash flow predictable. True self-funded (ASO) plans pay claims as they occur — costs vary month to month. Both are self-funded arrangements governed by ERISA and use stop-loss insurance. Level funded is designed for smaller groups (5–150 employees); traditional ASO self-funding is optimized for 100+ employees. The core economics are the same: you own the claims risk up to stop-loss thresholds, and you keep unused reserves.
BasicsWhat is a TPA and why do we need one?
A Third Party Administrator processes your claims, manages member ID cards and EOBs, handles provider network access, adjudicates claim disputes, and delivers monthly reporting. You need a TPA because as a self-funded employer you are the plan sponsor — you’re responsible for paying claims, but you hire a TPA to administer the operational complexity. TPA fees typically run $25–$60 per employee per month depending on services included. Some carriers offer ASO (Administrative Services Only) contracts that provide TPA services using the carrier’s infrastructure while you assume the claims risk.
ProWhat does ERISA preemption mean in practice?
ERISA (Employee Retirement Income Security Act) governs self-funded plans at the federal level and preempts most state insurance laws. Practically, this means: (1) You’re not required to cover state-mandated benefits that apply to fully insured Texas carriers — e.g., certain fertility treatments, specific mental health mandates, and other state-legislated coverages. (2) Your plan operates under one consistent federal framework regardless of which states your employees work in — significant for multi-state Texas employers. (3) State insurance premium taxes don’t apply. (4) You have more flexibility to design benefits that fit your specific workforce rather than a state-mandated template.
ProHow does stop-loss insurance protect us?
Stop-loss converts your theoretically unlimited claims liability into a capped, predictable cost. Specific stop-loss pays claims above a per-member annual deductible (typically $50,000–$200,000 for 100–500 employee groups). Aggregate stop-loss pays if your total group claims exceed a set percentage of expected claims (typically 120–125%) for the year. Combined, these caps mean you know in advance your maximum possible claims cost for the year. Stop-loss premiums are a fixed, known cost — typically 15–25% of total plan cost. The stop-loss carrier makes money when claims are low; you make money when claims are low too — your incentives are aligned.
RiskWhat are the real risks of self-funding?
The primary risks: (1) Claims volatility — monthly costs fluctuate with actual claims. A heavy claims month affects cash flow even with stop-loss (you pay first, stop-loss reimburses after). Aggregate stop-loss is triggered at year-end, not monthly. (2) Stop-loss renewal risk — after a catastrophic claim year, stop-loss carriers may non-renew the laser on a high-cost individual, require a higher specific deductible, or significantly increase premiums. (3) Administrative complexity — Form 5500 filing, SPD maintenance, HIPAA compliance as a plan sponsor, and claims reporting oversight are ongoing obligations. (4) Year 1 transition cost — you fund the initial claims reserve while also paying the last month of your prior carrier’s premium. Most employers build a 1–2 month claims reserve before transition.
DataWhat data will we have access to?
Full claims data is the defining operational advantage of self-funding over fully insured. You receive: monthly claims reports by category (inpatient, outpatient, ER, pharmacy, specialist, primary care), trend reports comparing utilization to benchmarks, high-cost claimant alerts (de-identified under HIPAA), pharmacy utilization reports with generic substitution opportunities, and population health dashboards. This data lets you identify where your spend is concentrated, design targeted wellness interventions, measure care management program ROI, and negotiate intelligently with vendors. Fully insured carriers own this data and rarely share meaningful detail — with self-funding, it’s yours.
TransitionHow long does it take to transition to self-funding?
A well-managed transition typically takes 90–120 days from decision to go-live. Key milestones: (1) TPA selection and contract negotiation (30–45 days). (2) Stop-loss carrier selection and underwriting (30–60 days — requires prior claims data or health questionnaires). (3) Plan document and SPD drafting. (4) Network access agreements. (5) Pharmacy benefit management setup. (6) Employee communications and open enrollment. The most common mistake is underestimating the cash flow planning needed — you need to fund a claims reserve before your first renewal date as a self-funded employer while your prior insured premium is ending.
ProCan we go back to fully insured if self-funding doesn’t work?
Yes — but with important caveats. If your group had a catastrophic claims year while self-funded, your claims history will follow you into fully insured underwriting (for large groups, 51+). Small group ACA plans (1–50) remain guaranteed issue and community-rated regardless of claims history — so very small employers can always return. For mid-large groups, plan for at least a 3-year commitment to self-funding to give the model sufficient time to perform and to avoid adverse selection at carrier re-entry. We always model a realistic exit strategy before recommending self-funding.
✅ Advantages of Self-Funding
- Eliminate carrier profit margins (8–12% of premium)
- Keep unused claims reserves — no year-end surrender
- Full monthly claims data transparency
- ERISA preemption — design benefits for your workforce
- State premium taxes don’t apply
- Independent PBM contracting — often 15–30% pharmacy savings
- Stop-loss caps catastrophic exposure
- Wellness ROI is directly measurable and retained
- Multi-state employers operate under one consistent plan
- Scales with your organization — better economics at 250+ employees
⚠️ Risks and Trade-offs
- Monthly cash flow volatility — claims paid as incurred
- Stop-loss renewal risk after catastrophic claim years
- Higher administrative burden (Form 5500, SPD, HIPAA as plan sponsor)
- Initial claims reserve funding requirement at transition
- Requires internal HR/finance sophistication to manage
- Year 1 savings often modest — 3-year horizon needed
- High-cost claimant exposure up to stop-loss deductible
- Not appropriate for groups under 50 employees (use level funded)
- Re-entry to fully insured may be difficult after bad claims years
Ready to Model Self-Funding for Your Texas Group?
We’ll run a full self-funding feasibility analysis — claims reserve requirements, stop-loss pricing, TPA comparison, and 3-year projected savings versus your current fully insured cost. TDI License #1816327.
No obligation · Texas employers only · Analysis delivered within 48–72 hours
📋 Sample Level Funded Employer Statement
What your monthly invoice and claims report actually look like — line by line. This is a representative 45-employee Texas manufacturer on a level funded plan. Numbers reflect typical 2025 plan year values.
📄 Monthly Invoice
Lone Star Precision Manufacturing LLC
Plan: Level Funded PPO · Plan Year: Jan 1 – Dec 31, 2025
Enrolled Employees
45
EE Only
18
EE + Spouse
12
EE + Children
9
EE + Family
6
Total Covered Lives
127
Fixed Monthly Components — Per Enrolled Employee
Rate per EE · Count · Total
Rate per EE · Count · Total
Line Item
Rate / EE
Enrolled
Amount
Expected Claims Fund
Funds the pool that pays your employees’ medical claims. Held in trust — unused dollars returned at year-end.
Funds the pool that pays your employees’ medical claims. Held in trust — unused dollars returned at year-end.
$498.00
45
$22,410.00
Specific Stop-Loss Premium
Per-member protection: insurer pays claims above $75,000/member/year. Mandatory. Non-refundable.
Per-member protection: insurer pays claims above $75,000/member/year. Mandatory. Non-refundable.
$64.50
45
$2,902.50
Aggregate Stop-Loss Premium
Group-level protection: insurer pays if total plan claims exceed 120% of expected annual claims ($359,064).
Group-level protection: insurer pays if total plan claims exceed 120% of expected annual claims ($359,064).
$18.75
45
$843.75
TPA Administration Fee
Claims processing, member services, EOB issuance, ID cards, UM/UR, provider appeals.
Claims processing, member services, EOB issuance, ID cards, UM/UR, provider appeals.
$32.00
45
$1,440.00
Network Access Fee (PPO)
Access to carrier contracted PPO network rates. Billed separately from TPA admin.
Access to carrier contracted PPO network rates. Billed separately from TPA admin.
$14.25
45
$641.25
Pharmacy Benefit Manager (PBM) Fee
PBM administration, formulary management, drug utilization review, specialty management.
PBM administration, formulary management, drug utilization review, specialty management.
$8.50
45
$382.50
Employee Assistance Program (EAP)
6 counseling sessions/year per employee. Mental health, financial counseling, legal referral.
6 counseling sessions/year per employee. Mental health, financial counseling, legal referral.
$3.00
45
$135.00
Wellness Program Access
Biometric screening platform, HRA questionnaire, wellness incentive tracking.
Biometric screening platform, HRA questionnaire, wellness incentive tracking.
$2.50
45
$112.50
SUBTOTAL — Employer Cost (Before Employee Contributions)
$641.50/EE
45
$28,867.50
Employee Contribution Credits (Payroll Deduction)
EE-Only Contributions (18 × $185.00/mo)
Employee share of premium deducted from payroll pre-tax under Section 125 cafeteria plan.
Employee share of premium deducted from payroll pre-tax under Section 125 cafeteria plan.
$185.00
18
−$3,330.00
EE + Spouse Contributions (12 × $320.00/mo)
$320.00
12
−$3,840.00
EE + Children Contributions (9 × $295.00/mo)
$295.00
9
−$2,655.00
EE + Family Contributions (6 × $445.00/mo)
$445.00
6
−$2,670.00
TOTAL EMPLOYEE CONTRIBUTIONS
−$12,495.00
NET EMPLOYER INVOICE — SEPTEMBER 2025
$16,372.50
$641.50
Total cost per enrolled employee/month
$364.17
Net employer cost after employee contributions
$277.78
Average employee contribution per employee
43.3%
Employee contribution as % of total cost
* The Claims Fund ($22,410/mo · $268,920/year expected) is held in trust on the employer’s behalf. If plan year actual paid claims are below $268,920, the surplus is returned to the employer at year-end settlement, less any applicable margin. Stop-loss premiums are fully earned and non-refundable. TPA, network, PBM, EAP, and wellness fees are fixed administrative costs that do not vary with claims experience.
📊 Monthly Claims Report
Lone Star Precision Manufacturing LLC
Monthly Claims Activity Report · Plan: Level Funded PPO
Medical Claims — Paid This Period
Claims Count · Billed · Allowed · Paid
Claims Count · Billed · Allowed · Paid
Category
Claims
Billed
Allowed (Network)
Plan Paid
Inpatient Hospital
1 admission: knee replacement, 2-day stay, Baylor Scott & White Plano
1 admission: knee replacement, 2-day stay, Baylor Scott & White Plano
1
$58,400
$31,200
$28,800
Outpatient Surgery / Facility
3 procedures: colonoscopy ×2, shoulder arthroscopy ×1
3 procedures: colonoscopy ×2, shoulder arthroscopy ×1
3
$24,750
$11,200
$9,640
Physician / Professional Services
Primary care (24), specialist visits (18), preventive (11), telehealth (8)
Primary care (24), specialist visits (18), preventive (11), telehealth (8)
61
$18,920
$9,840
$7,210
Emergency Room
2 ER visits: laceration repair ×1, chest pain evaluation ×1
2 ER visits: laceration repair ×1, chest pain evaluation ×1
2
$9,400
$4,800
$3,600
Urgent Care / Walk-In
7 visits: respiratory illness, minor injury, strep
7 visits: respiratory illness, minor injury, strep
7
$2,100
$1,540
$840
Radiology / Imaging
MRI ×3, X-ray ×6, CT ×2, ultrasound ×2
MRI ×3, X-ray ×6, CT ×2, ultrasound ×2
13
$14,200
$5,600
$4,320
Laboratory / Pathology
Routine bloodwork, metabolic panels, HbA1c, lipid panels
Routine bloodwork, metabolic panels, HbA1c, lipid panels
34
$6,800
$1,820
$1,400
Behavioral Health / Mental Health
Outpatient therapy ×8 sessions, psychiatry ×2
Outpatient therapy ×8 sessions, psychiatry ×2
10
$3,200
$2,400
$1,920
Physical / Occupational Therapy
Post-surgical PT (knee replacement recovery), 12 sessions
Post-surgical PT (knee replacement recovery), 12 sessions
12
$4,800
$2,640
$2,100
MEDICAL SUBTOTAL
143
$142,570
$71,040
$59,830
Pharmacy Claims — Paid This Period
Rxs · Retail · Mail · Specialty
Rxs · Retail · Mail · Specialty
Drug Category
Fills
Billed (AWP)
PBM Discount
Plan Paid
Generic Drugs — Retail
Brand generic substitution rate: 94%. Maintenance meds (metformin, lisinopril, atorvastatin, etc.)
Brand generic substitution rate: 94%. Maintenance meds (metformin, lisinopril, atorvastatin, etc.)
88
$8,240
−$5,120
$3,120
Brand Name Drugs — Retail
Eliquis, Symbicort, Trulicity, Jardiance (no generic available)
Eliquis, Symbicort, Trulicity, Jardiance (no generic available)
14
$18,600
−$9,200
$9,400
Specialty Pharmacy (Accredo / CVS Specialty)
Humira (adalimumab) — rheumatoid arthritis. 1 member.
Humira (adalimumab) — rheumatoid arthritis. 1 member.
1
$6,800
−$1,900
$4,900
Generic Drugs — Mail Order (90-day supply)
90-day maintenance fills. Members save copay tier vs. retail.
90-day maintenance fills. Members save copay tier vs. retail.
22
$4,100
−$2,800
$1,300
PHARMACY SUBTOTAL
125
$37,740
−$19,020
$18,720
Plan Period Summary — August Claims
Total Medical + Pharmacy Claims Paid
$78,550
Claims Fund Available (Monthly Deposit)
$22,410
YTD Claims Fund Deposited (Jan–Aug)
$179,280
YTD Claims Paid (Jan–Aug)
$201,430
YTD Claims vs. Fund — Current Position
−$22,150 (deficit: claims running 12.4% above fund)
Specific Stop-Loss — Members Approaching Threshold ($75K)
1 member: $41,200 YTD (55% of $75K threshold)
Aggregate Stop-Loss Attachment Point (120% of expected)
$322,704 for full plan year
Network Savings (Billed vs. Allowed — This Month)
$71,530 saved vs. billed charges
⚠️ BROKER NOTE: Claims running above fund. Aggregate stop-loss tracking active. Q4 wellness engagement recommended to manage Q4 elective utilization.
* Claims shown are paid claims with a 30-day processing lag. Billed charges reflect provider invoices before network contractual adjustments. Allowed amounts reflect contracted PPO rates. Plan paid = allowed minus member cost-sharing (deductibles, copays, coinsurance). Network savings = billed minus allowed — real dollars saved by being in-network. PBM discounts = difference between AWP (average wholesale price) and actual contract price negotiated by your pharmacy benefit manager.
📆 Year-End Reconciliation
Lone Star Precision Manufacturing LLC
Annual Level Funded Reconciliation · Plan Year Jan 1 – Dec 31, 2025
Claims Fund Reconciliation
Total Claims Fund Deposited (12 months × $22,410)
$268,920
Total Medical Claims Paid — Plan Year 2025
−$218,340
Total Pharmacy Claims Paid — Plan Year 2025
−$39,880
Total Claims Paid (Medical + Rx)
−$258,220
✅ GROSS CLAIMS SURPLUS (Fund Deposited − Total Claims Paid)
$10,700
Stop-Loss Activity — Plan Year 2025
Specific Stop-Loss Threshold (per member)
$75,000
Members Exceeding Specific Threshold
0 members (highest individual: $68,400)
Aggregate Attachment Point (120% × $268,920)
$322,704
Actual Total Claims vs. Aggregate Attachment
$258,220 — below aggregate threshold ✓
Stop-Loss Reimbursement Triggered
$0 (no thresholds breached)
Annual Cost Summary & Surplus Distribution
Total Fixed Admin Paid (TPA + Network + PBM + EAP + Wellness × 12 mo)
−$36,090
Total Stop-Loss Premiums Paid (Specific + Aggregate × 12 mo)
−$22,152
Total Employee Contributions Collected (12 mo)
+$149,940
Employer Final Cost Calculation
Total Employer Payments (12 months × $16,372.50)
$196,470
Claims Surplus Returned to Employer
+$10,700
✅ NET EMPLOYER ANNUAL COST (After Surplus Return)
$185,770
$10,700
Surplus returned at year-end
$4,128
Net employer cost per employee
96.1%
Claims as % of fund (healthy year)
$64,530
Total network savings (billed vs. allowed)
* Year-end surplus is the difference between your total claims fund deposits and actual paid claims for the plan year. Surplus is returned to the employer within 60–90 days of plan year close, after final runout period (typically 90 days for late-processed claims). Stop-loss premiums are fully earned and are never refundable. Administrative fees are also non-refundable. If claims had exceeded the aggregate attachment point ($322,704), the stop-loss carrier would have reimbursed amounts above that threshold — your maximum employer exposure is fully capped.
📋 Sample Self-Funded (ASO) Employer Statement
What a self-funded employer’s monthly invoice and claims reports look like — separated into fixed admin costs and variable claims paid. This represents a 210-employee Texas manufacturer on an ASO self-funded plan with stop-loss. Two tabs cover the monthly ASO invoice and the full claims analysis with stop-loss tracker.
📄 Monthly ASO Invoice
Hill Country Fabrication Inc. — Self-Funded Health Plan
ASO Self-Funded PPO · TPA: HealthSmart · PBM: Express Scripts · Plan Year: Jan 1 – Dec 31, 2025
Enrolled Employees
210
Covered Lives
487
EE Only
84
EE + Dep
126
Avg Family Size
2.32
Fixed Administrative Fees (Non-Claims — PEPM Basis)
Rate/EE · Count · Monthly Total
Rate/EE · Count · Monthly Total
Service
PEPM Rate
Enrolled
Amount
TPA Administration — HealthSmart
Claims adjudication, member services, EOBs, provider network access, UM/UR, appeals management
Claims adjudication, member services, EOBs, provider network access, UM/UR, appeals management
$28.50
210
$5,985.00
PPO Network Access Fee — HealthSmart TX
Access to HealthSmart’s Texas proprietary PPO network — discounted hospital and physician rates
Access to HealthSmart’s Texas proprietary PPO network — discounted hospital and physician rates
$12.00
210
$2,520.00
Specific Stop-Loss Premium — Sun Life Financial
Per-member stop-loss: plan pays claims above $100,000/member/year. Employer pays up to $100K; carrier pays above.
Per-member stop-loss: plan pays claims above $100,000/member/year. Employer pays up to $100K; carrier pays above.
$48.20
210
$10,122.00
Aggregate Stop-Loss Premium — Sun Life Financial
Group stop-loss: carrier pays if total annual claims exceed 125% of expected ($1,386,000). Expected annual = $1,108,800.
Group stop-loss: carrier pays if total annual claims exceed 125% of expected ($1,386,000). Expected annual = $1,108,800.
$14.75
210
$3,097.50
PBM Administration — Express Scripts (Evernorth)
Formulary management, drug utilization review, mail order administration, specialty management (Accredo)
Formulary management, drug utilization review, mail order administration, specialty management (Accredo)
$7.80
210
$1,638.00
Rx Network Access (Retail Pharmacy Network)
Access to 68,000 contracted retail pharmacies nationwide including TX-specific independent pharmacies
Access to 68,000 contracted retail pharmacies nationwide including TX-specific independent pharmacies
$2.40
210
$504.00
Care Management / Disease Management Program
Chronic condition outreach (diabetes, hypertension, CHF), high-cost case management, NICU/transplant coordination
Chronic condition outreach (diabetes, hypertension, CHF), high-cost case management, NICU/transplant coordination
$4.50
210
$945.00
Employee Assistance Program (EAP) — Spring Health
Unlimited digital mental health access + 8 in-person counseling sessions. Telemedicine therapy included.
Unlimited digital mental health access + 8 in-person counseling sessions. Telemedicine therapy included.
$3.25
210
$682.50
Wellness Platform — Virgin Pulse
Activity tracking, biometric screening coordination, HRA questionnaire, incentive management
Activity tracking, biometric screening coordination, HRA questionnaire, incentive management
$2.10
210
$441.00
COBRA Administration — WageWorks
COBRA notice issuance, premium collection, enrollment management for terminated employees
COBRA notice issuance, premium collection, enrollment management for terminated employees
$1.85
210
$388.50
Compliance & Reporting (Form 5500, ACA 1094/1095, SPD)
Annual ACA reporting, plan document maintenance, legal compliance monitoring. Annualized to monthly.
Annual ACA reporting, plan document maintenance, legal compliance monitoring. Annualized to monthly.
$1.20
210
$252.00
TOTAL FIXED ADMINISTRATIVE COSTS THIS MONTH
$126.55/EE
210
$26,575.50
Variable Claims Payment — Actual Claims Funded This Month
Note: Claims paid = actual incurred costs. No surplus/deficit — you pay what was claimed.
Note: Claims paid = actual incurred costs. No surplus/deficit — you pay what was claimed.
Medical Claims Funded — August 2025 Paid Claims (30-day lag)
Actual claims adjudicated and paid to providers on your behalf. Breakdown in Claims Analysis tab.
Actual claims adjudicated and paid to providers on your behalf. Breakdown in Claims Analysis tab.
$94,820.00
Pharmacy Claims Funded — August 2025 (Express Scripts)
Retail Rx + Mail Order + Specialty (Accredo) net of PBM rebates and member copays.
Retail Rx + Mail Order + Specialty (Accredo) net of PBM rebates and member copays.
$38,440.00
Claims Adjustments / Recoveries
Overpayment recoveries, coordination of benefits (COB) adjustments, subrogation collections
Overpayment recoveries, coordination of benefits (COB) adjustments, subrogation collections
−$2,140.00
NET VARIABLE CLAIMS FUNDED
$131,120.00
TOTAL EMPLOYER MONTHLY OBLIGATION (Fixed Admin + Net Claims)
$157,695.50
Less: Employee Contributions (Payroll Deduction Credits)
Total Employee Payroll Contributions — September
Pre-tax employee premium share collected and credited against employer obligation
Pre-tax employee premium share collected and credited against employer obligation
−$52,290.00
NET EMPLOYER WIRE TRANSFER DUE — September 2025
$105,405.50
$750.93
Total cost per enrolled employee (gross)
$501.93
Net employer cost per EE after contributions
$126.55
Fixed admin PEPM (known, predictable)
$624.38
Variable claims PEPM (actual experience)
* In self-funded plans, the employer funds actual claims as they are paid — there is no pre-funding “pot” like in level funded. Each month the wire transfer covers (a) fixed admin costs known in advance and (b) actual claims adjudicated and paid in the prior 30 days. This creates natural monthly variability — a heavy claims month costs more; a light month costs less. Stop-loss insurance caps your maximum annual exposure. The employer owns all the variance between those extremes.
📊 Claims Analysis Report
Hill Country Fabrication Inc. — Self-Funded Health Plan
Monthly Claims Analysis · August 2025 Paid Claims
Medical Claims by Service Category
Claims · Billed · PPO Savings · Allowed · Member OOP · Plan Paid
Claims · Billed · PPO Savings · Allowed · Member OOP · Plan Paid
Category
Claims
Billed
PPO Savings
Plan Paid
Inpatient Hospital
3 admissions: CABG (cardiac bypass) · normal delivery · lumbar fusion. Avg LOS: 3.1 days.
3 admissions: CABG (cardiac bypass) · normal delivery · lumbar fusion. Avg LOS: 3.1 days.
3
$312,400
−$189,600
$54,200
Outpatient Surgery / Ambulatory Facility
12 procedures: hernia repair ×3, cataracts ×2, knee scope ×2, colonoscopy ×5
12 procedures: hernia repair ×3, cataracts ×2, knee scope ×2, colonoscopy ×5
12
$118,700
−$71,400
$18,240
Physician / Professional Services
PCP visits (87), specialist (64), surgical assist (11), anesthesia (8), preventive (44)
PCP visits (87), specialist (64), surgical assist (11), anesthesia (8), preventive (44)
214
$84,600
−$44,200
$8,640
Emergency Room
6 ER visits: 2 true emergencies (MI, trauma), 4 non-emergent (classified post-adjudication)
6 ER visits: 2 true emergencies (MI, trauma), 4 non-emergent (classified post-adjudication)
6
$38,200
−$18,400
$4,720
Radiology / Imaging
MRI (14), CT (8), X-ray (22), ultrasound (9), nuclear medicine (2)
MRI (14), CT (8), X-ray (22), ultrasound (9), nuclear medicine (2)
55
$64,800
−$38,400
$4,800
Laboratory / Pathology
Routine panels (144), specialized diagnostics (28), genetic testing (2), cultures (19)
Routine panels (144), specialized diagnostics (28), genetic testing (2), cultures (19)
193
$28,400
−$19,200
$1,840
Behavioral Health / Substance Use Disorder
Outpatient therapy (38 sessions), IOP (intensive outpatient, 14 days), psychiatry eval (4)
Outpatient therapy (38 sessions), IOP (intensive outpatient, 14 days), psychiatry eval (4)
56
$18,400
−$8,200
$2,280
Physical / Occupational / Speech Therapy
Post-surgical rehab (42 sessions), chronic pain management (18), speech therapy pediatric (6)
Post-surgical rehab (42 sessions), chronic pain management (18), speech therapy pediatric (6)
66
$22,800
−$10,400
$2,640
Durable Medical Equipment (DME)
CPAP/supplies (4), knee brace (3), back brace (2), diabetic supplies (11)
CPAP/supplies (4), knee brace (3), back brace (2), diabetic supplies (11)
20
$12,400
−$6,800
$3,200
Home Health / Skilled Nursing
Post-discharge home health (cardiac patient): 14 visits at $220/visit
Post-discharge home health (cardiac patient): 14 visits at $220/visit
14
$4,800
−$1,520
$2,160
Telehealth / Virtual Visits
Spring Health therapy (digital, EAP), Teladoc general medical, urgent virtual visits
Spring Health therapy (digital, EAP), Teladoc general medical, urgent virtual visits
44
$5,280
−$1,760
$800
MEDICAL SUBTOTAL
683
$710,780
−$409,880
$103,520
Less: Member Cost-Sharing Collected (Deductibles + Copays + Coinsurance)
Amounts paid by employees directly — reduces employer plan paid amount
Amounts paid by employees directly — reduces employer plan paid amount
−$8,700
NET MEDICAL CLAIMS FUNDED
$94,820
Pharmacy Claims by Drug Category (Express Scripts — August Fills)
Fills · AWP · Discount · Rebate · Net Plan Cost
Fills · AWP · Discount · Rebate · Net Plan Cost
Drug Category
Fills
Billed AWP
Discount + Rebate
Plan Paid
Generic — Retail 30-day
94.2% generic fill rate. Metformin, lisinopril, atorvastatin, omeprazole, amlodipine top drugs.
94.2% generic fill rate. Metformin, lisinopril, atorvastatin, omeprazole, amlodipine top drugs.
312
$24,800
−$17,600
$7,200
Brand — Retail 30-day
Eliquis (8), Jardiance (6), Ozempic (5), Dupixent (2), Stelara (1). No generics available.
Eliquis (8), Jardiance (6), Ozempic (5), Dupixent (2), Stelara (1). No generics available.
22
$68,400
−$29,800
$38,600
Generic — Mail Order 90-day (Express Scripts Home Delivery)
Maintenance medications. Members save one copay tier vs. retail. 28% of maintenance fills.
Maintenance medications. Members save one copay tier vs. retail. 28% of maintenance fills.
88
$18,200
−$13,400
$4,800
Specialty Pharmacy — Accredo (Express Scripts)
Humira biosimilar (Hadlima) switch in progress. Entyvio (Crohn’s), Tecfidera (MS). 3 members.
Humira biosimilar (Hadlima) switch in progress. Entyvio (Crohn’s), Tecfidera (MS). 3 members.
3
$38,600
−$18,960
$19,640
PBM Rebates Applied (Express Scripts Formulary Rebates)
Manufacturer rebates negotiated by ESI. Allocated monthly on estimated basis; true-up quarterly.
Manufacturer rebates negotiated by ESI. Allocated monthly on estimated basis; true-up quarterly.
—
—
−$31,800
−$31,800
NET PHARMACY FUNDED (After Discounts + Rebates)
425
$150,000
−$111,560
$38,440
$409,880
Medical PPO network savings this month
$111,560
Pharmacy discounts + rebates this month
$521.44
Net claims PEPM this month
57.7%
Total plan savings vs. billed/AWP charges
* Medical PPO savings = difference between what providers billed and the contracted network rate your plan pays. This is the value of your network contract — not savings in the sense of money you receive back, but cost the plan never incurs. Pharmacy discounts are contractual — the PBM negotiates lower unit costs. Rebates are manufacturer payments returned to the plan quarterly. Both appear as reductions to your net pharmacy obligation. Combined, your plan captured $521,440 in savings this month vs. what uninsured/out-of-network costs would have been.
🛡️ Stop-Loss Tracker
Hill Country Fabrication Inc. — Stop-Loss Tracking Report
Specific Stop-Loss Threshold: $100,000 per member · Plan Year-to-Date: Jan–Aug 2025
Specific Threshold
$100,000
Members Over Threshold YTD
0
Members 75%+ of Threshold
2
Members 50–75% of Threshold
4
Aggregate Attachment Point
$1,386,000
YTD Total Claims
$712,400
High-Cost Member Tracker (De-Identified per HIPAA)
Member ID · Diagnosis Category · YTD Claims · % of Threshold · Status
Member ID · Diagnosis Category · YTD Claims · % of Threshold · Status
Member ID
YTD Claims
% of $100K
Remaining to Threshold
Status
TX-0048Cardiac surgery + post-acute rehab · Inpatient ×2
$88,200
88.2%
$11,800
⚠️ Watch
TX-0112Oncology (breast cancer) · Chemo + radiation · Specialty Rx
$76,400
76.4%
$23,600
⚠️ Watch
TX-0267Rheumatoid arthritis · Specialty Rx (Humira → biosimilar switch)
$62,100
62.1%
$37,900
Tracking
TX-0391Multiple sclerosis · Tecfidera (specialty Rx) + neurology
$58,800
58.8%
$41,200
Tracking
TX-0044Type 2 diabetes + CHF · Multiple hospitalizations + Ozempic
$54,200
54.2%
$45,800
Tracking
TX-0189Crohn’s disease · Entyvio (specialty Rx) + GI specialist
$51,400
51.4%
$48,600
Tracking
+ 204 additional members with YTD claims below $50,000 threshold — not individually tracked. Total: 210 enrolled.
Aggregate Stop-Loss Tracking
Expected Annual Claims (basis for aggregate calculation)
$1,108,800
Aggregate Stop-Loss Attachment Point (125% of expected)
$1,386,000
YTD Claims Paid Through August (8 of 12 months)
$712,400
YTD Claims as % of Aggregate Attachment
51.4% — well below attachment
Pro-Rated Expected Claims Through August (8 months)
$739,200
Actual vs. Pro-Rated Expected — Variance
−$26,800 (claims running 3.6% BELOW expectation — favorable)
✅ Aggregate Stop-Loss Projection: No trigger expected at current trend
Projected full-year: $1,067,400 vs. $1,386,000 attachment
Stop-Loss Claim Filing Guidance
Member TX-0048: Likely to exceed $100K threshold in September or October
Notify Sun Life stop-loss team. Pre-notification of pending large claim accelerates reimbursement. File specific stop-loss claim within 30 days of threshold breach. Sun Life reimburses within 30 business days of complete claim submission.
Notify Sun Life stop-loss team. Pre-notification of pending large claim accelerates reimbursement. File specific stop-loss claim within 30 days of threshold breach. Sun Life reimburses within 30 business days of complete claim submission.
Action required
Member TX-0112: May exceed threshold — oncology treatment ongoing
Case management engaged. Oncology cost management program in place. Stop-loss pre-filing initiated.
Case management engaged. Oncology cost management program in place. Stop-loss pre-filing initiated.
Monitor weekly
0
Members over $100K threshold YTD
2
Members within $25K of threshold
$318,600
Stop-loss coverage headroom (aggregate)
3.6%
Claims running below expectation YTD
* Stop-loss tracking is a proactive, not reactive, function. The TPA monitors all members approaching the specific threshold and alerts the employer and stop-loss carrier before the threshold is breached. Pre-notification is typically required by the stop-loss policy — failure to notify can result in delayed reimbursement. Aggregate stop-loss tracking is calculated against the full plan year expected claims, so interim monthly variance is expected; what matters is the full-year trend. Member IDs are HIPAA de-identified — the employer’s benefits administrator has access to the identified version through the TPA’s secure employer portal.