Level-Funded Plans Might Be a Great Way to Lower Your Group Coverage Costs
Is a Level-Funded plan right for my group?
Many of our customers are choosing level-funded plans rather going the fully insured coverage route. Employers find that the flexibility and control offered through Level-funded plans are far better than the structured design of other plans.
Rather than having to pay a monthly premium to a commercial insurer, Level-funded plans provide extraordinary cost containment. Let’s dive a bit deeper into what Level-funded plans are and what benefits your business can hope to achieve from using them.
What are Level-Funded Plans?
Level funded plans are partially self-funded insurance plans that can insure as few as five employees. Instead of paying high premiums, employers only pay the health care costs their employees actually incur.
With a Level-funded plan, employers pay a set amount each month to a healthcare services company. These fees go to administrative costs and stop-loss insurance. Stop-loss insurance is a safety net that pays for unexpected costs such as if an employee needed an organ transplant or developed a deadly disease.
Companies then put aside enough funds to cover these unexpected costs every year. At the end of the year if all employees were healthy, a rebate is issued to the employer. If the costs exceed that amount, companies are protected by stop-loss insurance.
Benefits of a Level-Funded Plan
Level-funded plans are excellent for companies who have employees in good health. Companies can be denied coverage if a member is unhealthy. However, in the best case scenario, Level-funded plans offer the following benefits:
- Different rates than community rating
- You have the potential to get unspent premium back
- Customized health plans for employees
- Exemption from (some) federal healthcare laws & health insurance taxes
If you are looking for a better way to lower your group coverage costs, it may serve you well to investigate Level-funded options. These plans are subject to underwriting, allowing the rate to fluctuate with those who sign up instead of requiring an expensive community rate based solely on your location.
If you are interested in Level-funded plans, contact us today. We’ll walk you through the ins and outs.