How has your group health insurance plan been treating you lately?
- Is it affordable for your business?
- Do know what your group's claims record looks like?
- Are you receiving rebates at the end of the year for being healthy?
If you can't answer "YES!" to all of these questions, then it's probably worth your while to look into a Level Funded Health Plan.
Not sure what a Level Funded Health Plan is or how it works? No problem. We've got you covered.
What is Level Funding?
The short explanation: Level Funding is a type of health plan structure that gives you all of the benefits of a large employer, but at a fraction of the cost.
Level funded plans combine the fixed premiums of (traditional) fully insured plans with the financial advantages of self-insured plans. These types of plans are emerging as a popular option among employers because it provides the predictability of a fully-insured plan, but businesses only pay for the actual healthcare costs that its employees incur.
How it works:
Level Funding is a type of self-insuring. Rather than have an insurance company pay out health claims to your employees, your business does it! (Ok, technically businesses pay a predetermined “level” fee/premium to a Third Party Administrator (TPA) and that TPA processes and pays claims and collects premiums.)
This might sound scary, but the great thing about Level Funding is that you don’t incur any more risk than if you were to have a fully-insured (traditional) plan with an insurance carrier. Level funded plans have an individual and aggregate stop-loss insurance policy embedded, which protects employers if an individual’s (or the entire group’s) claims exceed a certain dollar amount. After the end of the year-long plan, the TPA will refund the company if claims came in lower than projected. If claims exceed the aggregate stop loss amount, then the company will be protected from this overage by the embedded stop-loss policy.
The benefits of Level Funding:
Level-Funded plans provide businesses with a range of benefits, including:
● Potential for lowering monthly premium outlays
● Rates are based on claim maximum and risk (instead of age)
● Stop-loss coverage protects employers from worst-case scenarios
● Customizable plan deductibles, copays, and more!
● National PPO Networks
● Transparency into plan performance with monthly reporting
● Rebate or credit towards next year if your group has a healthy year
Is Level Funding the right solution for my business?
Level-funded plans are a great option for businesses that want more flexibility and lower costs. In general, groups should be healthy and expect a low number of high-cost claims. These companies should be between 5-49 enrolled employees (in most states), and want to move away from the ACA community rating that is seen with traditional health plans.
These plans may also be the right choice if a group wants to fully understand their claims data and its impact their group’s rates. These groups should be open to a long-term (3-5 years) approach to containing costs.
Finally, groups should be interested in the possibility of getting part of their costs back through a surplus. (But really, who wouldn’t be interested in this? A rebate?? Yes please!)
If you have additional questions about level funding, or are interested in exploring this type of cost-saving plan, get in touch with us!
Pendella's experts are on standby via phone, email and chat, but the easiest way to get the process started is by requesting a quote online.