If the advantages of a self-funded health insurance plan appeal to you but your company needs more predictability from a financial standpoint, level funding insurance is an option that captures the best of both worlds. It is becoming an increasingly popular way for businesses to provide health insurance to their employees while keeping expenses under control.
What Is Level Funding?
Self-funded health insurance plans see employers setting premium rates based on the claims history of their employees and paying out their claims as they are submitted. Level funding is a way to help manage that risk and provide greater certainty for budgeting.
With level funding, the employer pays a fixed amount of money to a carrier each month to cover administration, stop loss coverage, and the maximum claims expected according to underwriting projections. The carrier who facilitates the level funding will pay out the claims that come in during the year, making it a relatively hands-off process.
Benefits For Employers
Here is a look at some of the benefits that may await employers who choose to institute a level funding approach for their employee health insurance plan. Of course, each case is different, and the experts at New City Insurance can take a look at the specifics of your business and explain how it can be beneficial to you.
Insurance Rates Based On Claims
One big benefit of going with level funding is the ability to customize the plan to suit your specific needs. Your company’s claims experience will be used to determine your rates, and you will be able to see your claims data to look for potential areas where savings can be made in the future.
Refund For The Difference Of Claims Not Used
Should any of the money that is set aside by your company each month for covering claims go unused, it is common you will get a refund for the surplus at the close of the next year. While the refund is not a cash refund, your company will get to use those funds for future medical premiums.
If a company leaves to go to a different insurance carrier, then that company cannot apply the refund to the new insurance carrier. This is an opportunity that you will not get when you pay premiums with a fully insured plan. If, on the other hand, the claims exceed what your company paid into the program, your stop loss insurance will be able to cover the overage amount in many cases.
Reports On Utilization Trends
Many of the level funding plan options available will offer detailed reports on utilization trends. This can help to spot areas where employees might be contributing to overspending, such as visiting an emergency room when urgent care would have sufficed. With this information in mind, you can improve your claims costs in the future by managing education and wellness programs.
The Flexibility Offered
Level funded plans provide companies with flexibility that other plans don’t allow for. Businesses can customize plans to accommodate their needs based on their budget, what coverage employees find valuable, and specific features.
With level funding there can be an additional benefit for employees to choose their own doctors and providers. This can include telehealth and telemedicine options as well.
Is A Level Funded Plan Right For You?
While a level funded plan comes with a lot of benefits, it may not be the best choice for everyone. If you are a small to mid-size company that wants to give their employees a plan that allows for flexibility and customizable coverage options, then a level funding plan might be the right choice.
Ensuring that your location is suitable for level funded plan is another factor to consider. State regulations will determine payment and other terms. Make sure you research the featured that apply based on your specific company before deciding if level funding is right for you.
Speak To A Benefit Consultant About Level Funding
New City advisors are here to help you and your employees navigate the benefits process and choose your level funding plan. Work with dedicated advisors to help mitigate you through the process of acquiring coverage.
If your business is looking to exert greater control over your employee health care plans, level funding may offer you the possibility of finding cost savings while still enjoying a consistent premium every month. Get in touch with the experienced benefits consultants at New City Insurance to find out whether this approach makes sense for your situation. Please give us a call at 888.210.2759 or request a consultation online.