If you’ve reached the point where you’re comparing MEWA and level-funded health plans, you’re already in a good position. In many cases, it means your business has qualified for two strong alternatives to traditional small-group coverage.
The challenge usually isn’t deciding whether one option is good and the other isn’t. The challenge is understanding the trade-offs and determining which structure is the better fit for your company, your employees, and your long-term goals.
Both MEWAs and level-funded plans can offer competitive pricing. Both can work well for Ohio employers. The differences usually appear in how the plans are structured, how underwriting affects the arrangement, how renewals behave over time, and how comfortable the employer is with the underlying approach.
Sometimes a MEWA is the obvious choice. Sometimes a level-funded plan offers advantages worth considering. And sometimes the decision comes down to two competitive proposals where either option could work.
This guide explains where Ohio MEWAs and level-funded plans overlap, where they differ, and how employers typically evaluate the trade-offs.
At a Glance
- Both MEWAs and level-funded plans are commonly compared as alternatives to traditional ACA small-group coverage.
- Both often use underwriting and may produce group-specific pricing.
- Ohio MEWAs generally operate through chambers of commerce or association-based arrangements.
- Level-funded plans are typically employer-sponsored self-funded plans supported by stop-loss insurance and administrative services.
- When a group qualifies for both, the decision often comes down to plan structure, employer preferences, renewal expectations, and long-term fit rather than premium alone.
Quick Comparison
| Factor | Ohio MEWA | Level-Funded Plan |
|---|---|---|
| Medical underwriting | Commonly used | Commonly used |
| Association membership | Usually required | Not required |
| Participation requirements | Common | Common |
| Contribution requirements | Common | Common |
| Provider networks | Program-specific | Carrier-specific |
| Claims refund opportunity | Typically no | May be available depending on the arrangement |
| Renewal behavior | May be influenced by underwriting and program experience | Often more responsive to underwriting and claims experience |
| Carrier approval process | Generally tied to program eligibility and underwriting-sensitive pricing | Underwriting may affect both pricing and whether coverage is offered |
| Administrative structure | Association-based arrangement | Self-funded arrangement with stop-loss protection |
| Typical employer profile | Employer seeking a competitive chamber or association option | Employer comfortable with a different funding structure and potential refund opportunities |
Why Employers Compare MEWAs and Level-Funded Plans
Most Ohio employers don’t begin by deciding they want a MEWA or a level-funded plan. They begin because something creates a reason to review their health insurance.
That might be a renewal increase, a new business offering benefits for the first time, company growth, a provider network change, employee feedback, a broker recommendation, or simply a decision to revisit the market after several years.
Once employers begin exploring their options, they often compare:
- ACA small-group plans
- Ohio MEWA health plans
- Level-funded health plans
- ICHRAs in certain situations
MEWAs and level-funded plans are frequently compared because both can offer competitive alternatives to traditional ACA small-group coverage for employers that qualify.
What Is an Ohio MEWA?
MEWA stands for Multiple Employer Welfare Arrangement.
A MEWA is an arrangement that provides benefits to employees of multiple employers through a chamber, trade association, professional association, or similar organization.
Many Ohio employers encounter MEWAs through programs such as SOCA, COSE, or the Ohio Chamber Health Benefit Program.
From the employer’s perspective, a MEWA often feels similar to a traditional group health plan. Employees receive ID cards, use provider networks, and access medical and prescription benefits much as they would under other forms of group coverage.
Behind the scenes, the arrangement operates through a broader association that covers multiple participating employers.
A MEWA may have its own eligibility rules, membership requirements, plan menu, underwriting process, participation requirements, contribution requirements, and renewal structure.
What Is a Level-Funded Health Plan?
A level-funded plan is generally a self-funded employer health plan supported by stop-loss insurance and administrative services.
From the employee’s perspective, it often looks very similar to traditional group health insurance. Employees use provider networks, ID cards, deductibles, copays, and prescription benefits much as they would under other plans.
The difference is how the plan is funded. The employer’s monthly payment generally covers expected claims, stop-loss protection, administration, and other plan expenses.
In some arrangements, favorable claims experience may create the possibility of a surplus refund or credit after year-end accounting. That potential refund opportunity is one reason employers compare level-funded plans with MEWAs when both options are available.
At the same time, a level-funded plan is not the same as a traditional fully insured small-group policy. Underwriting can affect both the initial offer and future renewals, so employers should understand how the structure works before choosing it.
How MEWAs and Level-Funded Plans Are Similar
MEWAs and level-funded plans are often compared because both can provide competitive alternatives to traditional ACA small-group coverage for employers that qualify. Unlike ACA small-group plans, both generally use medical underwriting as part of the pricing process, meaning the health characteristics of the group may influence the proposal.
That means employers evaluating either option typically review many of the same factors, including:
- census information
- employee and dependent enrollment
- contribution strategy
- participation requirements
- underwriting information
- provider networks
- prescription drug coverage
- plan design
- renewal expectations
- long-term sustainability
As with any health plan comparison, the lowest premium is not always the best choice. Provider networks, plan design, renewal expectations, and overall fit for the business are just as important.
How MEWAs and Level-Funded Plans Are Different
The biggest differences between a MEWA and a level-funded plan involve how the arrangement is structured and how underwriting is applied.
A MEWA is generally an association-based arrangement offered through a chamber, trade association, professional association, or similar organization. A level-funded plan is a self-funded employer health plan supported by stop-loss insurance and administrative services.
From the employer’s perspective, a MEWA often feels more familiar. A level-funded plan uses a different funding structure, even though the employee experience may look much the same.
The most important practical distinction is how underwriting is used. A MEWA commonly uses underwriting to help determine pricing within the program. A level-funded carrier may use underwriting to determine pricing and whether coverage is offered.
That does not mean every employer will qualify for every MEWA. Programs still have eligibility, membership, participation, contribution, and other requirements. But a level-funded carrier may also decide not to quote or not to continue the arrangement at renewal.
When both options are otherwise competitive, differences such as surplus refund opportunities and renewal behavior often become the deciding factors.
The Surplus Refund Difference
One of the clearest differences between a MEWA and a level-funded plan is the possibility of a surplus refund.
In some level-funded arrangements, if claims are lower than expected, the employer may receive a refund or credit for a portion of the unused claims funding after the plan year. The rules vary by carrier and contract, and a refund is never guaranteed.
When a MEWA and a level-funded proposal are otherwise similar, that potential refund may make the level-funded option more attractive. For employers with favorable claims experience, it can improve the overall cost of coverage.
For others, the additional complexity is not worth the possibility of a refund, especially if the MEWA is already competitive. It comes down to which trade-offs best fit the business.
Renewals and Future Considerations
The first-year proposal should never be the only factor in the decision.
Both MEWAs and level-funded plans should be evaluated with renewals in mind, but the factors that drive those renewals are different.
A MEWA renewal may be influenced by program pricing, underwriting, participation, plan changes, and broader market conditions. A level-funded renewal is often more directly affected by the group’s claims experience, stop-loss pricing, enrollment changes, and carrier underwriting.
In practical terms, a level-funded renewal may reflect what happened within your group more closely than a MEWA renewal. That can work in your favor after a healthy claims year, but it can also lead to larger adjustments or, in some cases, a carrier deciding not to continue the arrangement.
Both structures should be reviewed over time. If a renewal becomes less competitive, employers may compare ACA coverage, another MEWA, a different level-funded option, or an ICHRA depending on the situation.
When a MEWA Often Makes Sense
A MEWA often makes sense when the employer wants a competitive alternative to traditional small-group coverage and prefers a structure that feels familiar.
A MEWA may be a good fit when:
- the employer qualifies for the program
- the pricing, provider network, and plan design meet the company’s needs
- the program’s membership and participation requirements are a good fit
- the employer values a straightforward structure over the possibility of a surplus refund
For many small businesses, simplicity has value. If a MEWA offers competitive pricing, a strong provider network, and a plan the employer feels comfortable managing, it may be the better choice—even if a level-funded proposal offers slightly more potential upside on paper.
When a Level-Funded Plan Often Makes Sense
A level-funded plan often makes sense when the employer receives a competitive proposal and is comfortable with the funding structure.
A level-funded plan may be a good fit when:
- the pricing, provider network, and plan design meet the company’s needs
- the employer understands how the funding structure differs from traditional coverage
- the employer is comfortable with renewals being more closely tied to the group’s claims experience
- the possibility of a surplus refund is an important advantage
When a MEWA and a level-funded plan are otherwise similar, the potential for a surplus refund may make the level-funded option more attractive. For employers who are comfortable with the structure and the renewal considerations, that additional upside can make it the better long-term fit.
The Practical Decision When Both Options Look Good
The hardest decisions are not when one proposal is clearly better. They are when both options are strong.
When that happens, it helps to step back and compare the factors that matter most:
- Which provider network and plan design work best for our employees?
- Which contribution strategy is most sustainable?
- How much do we value the possibility of a surplus refund?
- Which structure are we more comfortable managing over time?
- How would we respond if the next renewal changes?
Health insurance is more than a financial decision. It is also an operational one. The best choice is not always the one with the greatest theoretical upside, but the one that best fits the business over the long term.
Common Mistakes Employers Should Avoid
A few common mistakes can make it harder to choose between a MEWA and a level-funded plan.
- Focusing only on the first-year premium. Price matters, but so do provider networks, plan design, employee costs, and long-term fit.
- Assuming a surplus refund is guaranteed. A refund may be possible with some level-funded plans, but it depends on claims experience and the terms of the arrangement.
- Overlooking how the plans differ. MEWAs and level-funded plans may look similar to employees, but they operate differently behind the scenes and should be evaluated accordingly.
- Thinking only about the first year. A good health insurance decision considers not only today’s proposal, but also how the employer will respond if the next renewal changes.
Final Thoughts
Both MEWAs and level-funded plans can be excellent options for Ohio small businesses. Neither is automatically better.
When both options are competitive, the decision usually comes down to which structure best fits the employer’s goals, workforce, and comfort level.
The goal is not simply to find the lowest premium or the most complex solution. It is to understand how each option works and choose the one that you’ll feel confident managing over time.
Frequently Asked Questions
Is a MEWA better than a level-funded plan?
Not necessarily. Both can be excellent options for Ohio employers that qualify. The better choice depends on factors such as pricing, provider networks, underwriting results, renewal expectations, and which structure best fits the business over time.
Can a level-funded carrier decline to offer coverage?
Generally, yes. Medical underwriting may affect pricing, whether coverage is offered, and whether the arrangement is renewed in future years.
Can an Ohio MEWA decline to provide a quote?
Ohio MEWAs generally use medical underwriting as part of pricing and program participation rather than simply declining proposals based on health status alone. Employers must still meet the program’s eligibility, membership, participation, contribution, and other requirements.
Do MEWAs and level-funded plans both use medical underwriting?
Generally, yes. Unlike ACA small-group plans, both commonly use medical underwriting as part of the pricing process. The way underwriting is applied, however, can differ between the two structures.
Can a level-funded plan return money at the end of the year?
Sometimes. Some level-funded arrangements may provide a surplus refund or credit if claims are lower than expected and the terms of the arrangement allow it. Refunds are not guaranteed and vary by carrier and contract.
Are employees covered differently under a MEWA or a level-funded plan?
From the employee’s perspective, the experience is often very similar. Employees typically receive ID cards, use provider networks, and access medical and prescription benefits much as they would under other group health plans. The primary differences are in how the plans are structured and funded.
Should employers compare more than just the premium?
Yes. Premium is important, but it is only one part of the decision. Provider networks, plan design, employee cost sharing, renewal expectations, and the long-term fit for the business are all important considerations.
What if neither a MEWA nor a level-funded plan is the best fit?
That can happen. Depending on the employer’s circumstances, traditional ACA small-group coverage or an ICHRA may be more appropriate. The goal is to compare the available options and choose the structure that best fits the business rather than assuming one approach is always better.
Related Resources
Guide to Small Business Health Insurance in Ohio
Best Health Insurance Options for Small Businesses in Ohio
How Much Does Small Business Health Insurance Cost in Ohio?
Health Insurance Prescreen for Ohio Small Businesses
Why Small Businesses Should Build a Health Insurance Renewal System
About the Author
Ted Stevenot is a Partner at McCarthy Stevenot Agency, Inc. He has helped Ohio employers evaluate employee benefits since 1991. His work focuses on helping small businesses compare ACA small-group plans, MEWAs, level-funded plans, and ICHRAs while balancing cost, employee benefits, and long-term sustainability.
Disclaimer: This article is intended for general educational purposes and should not be interpreted as legal, tax, or carrier-specific guidance. Eligibility, underwriting, plan availability, and renewal practices may vary by carrier, MEWA program, employer circumstances, and applicable law. Employers should review their specific situation before making health insurance decisions.