As a small business owner, you’re constantly having to find cost-saving solutions to everyday problems while providing your employees with the benefits they deserve. One area where you may struggle with this the most is your health insurance.
If you’re an employer who is generous enough to offer their small business employees health insurance benefits, you’ve likely done some research into insurance options. Maybe you found fully-funded and self-funded plans and decided neither were right for you. Thankfully, there’s a compromise – level-funded insurance.
What is Level-Funded Insurance?
Level-funded insurance is a hybrid health insurance option that combines fully-funded and self-funded plans.
With a level-funded plan, you and your employees benefit from the cost savings and customization of self-funded plans but still get the financial safety and stability of fully-funded plans. Level-funded plans give you peace of mind knowing your employees are covered and allow you to pay less money.
What Makes a Level-Funded Plan Different?
Level-funded plans are not held to the same Affordable Care Act requirements as other types of insurance. This means less administrative work for your company which may not have the same resources as larger companies.
With level-funded plans, you have access to educational resources to help you reduce overspending. Receive utilization reports to influence your wellness programs and find areas to cut claim costs in the future.
Components of a Level-Funded Plan
Every level-funded plan contains the same cost elements: administrative costs, aggregate stop loss coverage, claims, and individual stop loss coverage.
Administrative Costs – These costs are fixed during the year and remain the same regardless of the number of claims. The funds go towards costs associated with network availability, claims adjudication, and the prescription network.
Aggregate Stop Loss Coverage – The aggregate stop loss coverage is similar to a family deductible. Once your group meets the combined claim limit, the reinsurance pays the remainder of the claims.
Claims – At the beginning of the year, the insurance carrier estimates the yearly cost of your policy and divides it by your total number of employees. This number is each employee’s total premium that is divided between you and your employee. If the cost of the policy turns out to be lower than expected, the unused funds go towards future premiums.
Individual Stop Loss Coverage – This stop loss coverage is based on each employee’s claims. Employers pay this stop loss amount so if an employee reaches their claim limit, they’re still protected for the year.
We don’t look at you like just another claim number. We want to help you focus on your health and the health of your employees. If you want to find out more about how a level-funded plan can work for your small business, connect with our team! We’ll help you understand all the advantages of a level-funded plan and what this option could look like in your own company.