Group Health Plan Funding Types for California Employers

There are four ways a California employer can fund health benefits, and the right one depends on group size, claims history and appetite for risk. California law shapes these choices more than most states – the stop-loss rules here effectively decide who can use level funding, and the strong individual market changes the ICHRA math. Here is the map.

The four funding types

• Fully insured – the carrier takes all claims risk for a fixed premium. The default for most California small groups (1-100 employees).
• Level funded – self-funding with training wheels: fixed monthly payments, stop-loss protection, and a potential refund in low-claims years. Restricted in California under 51 employees by the stop-loss law, but a handful of carriers still write it.
• Self-funded (ASO) – the employer pays its own claims through a TPA and buys stop-loss for catastrophes. Built for larger, data-rich groups.
• ICHRA – no group plan at all: the employer reimburses employees tax-free for individual plans they choose themselves.

Quick comparison

Type	Who carries claims risk	Typical CA fit	Refund potential
Fully insured	Carrier	Any size; default for 1-100	None
Level funded	Employer, capped by stop-loss	Healthy groups, realistically 25+ in CA	Yes, in low-claims years
Self-funded	Employer, capped by stop-loss	Typically 100+ with claims data	Employer keeps all savings
ICHRA	Individual market carriers	Any size; dispersed or budget-driven groups	Unused allowances stay with employer

Not sure where your group lands? That is literally the first conversation we have with every employer – it takes about fifteen minutes with your census and current renewal.

Reviewed August 2026. Plan availability, networks and rates vary by county and group size. We never publish premiums we cannot verify for California – request a quote for real numbers.