Are you an employer, HR director, or CFO looking for a healthcare plan that offers cost savings, flexibility, and customization? Allow me to introduce you to level funded health insurance.
A level funded health plan works similarly to a traditional fully insured health plan in terms of coverage but offers a host of additional benefits. The premiums you pay are divided into plan administration, stop-loss insurance, and a claims account.
Delegating the day-to-day operations to a Third-Party Administrator (TPA), you can focus on what you do best – managing your business. The TPA handles claims payments to providers, provides cost management reports, and customer service for group members.
Stop-loss insurance acts as your financial safeguard. This kicks in when a group has higher than expected claims, protecting your company's finances and limiting exposure to unexpected claims.
The claims account acts as an opex account for everyday claims as they arise. This is the money set aside monthly to meet anticipated claims based on projected risk. The brilliant part of this account is you only pay for the actual costs your employees incur.
But what does all this mean for you as an employer?
Firstly, it brings regular and predictable costs. Unlike the volatility of self-funded plan costs, level funded plans offer a steady monthly fee, determined by the underwriting of your group. This predictability aids in budgeting and financial planning.
Secondly, it unlocks considerable cost savings. As level funded plans are a version of self-insured, you only pay for the actual healthcare costs your employees incur. Especially for workforces with a healthy track record, this can translate into significant savings over fully insured plans.
Thirdly, it enables greater customization and flexibility than what most businesses are familiar with. You can choose your network of healthcare providers as well as include enhanced benefits that lower the employee cost share for treatments. With the absence of several key regulations of the Affordable Care Act in level funded plans, you can tailor the plan to your specific needs and preferences, and also give plan members the freedom to choose their service providers.
Finally, it can offer a potential refund. At the end of the year, if the amount you've paid exceeds the actual claims, you may be eligible for a refund. This means additional cost savings for you.
In a nutshell, level funded health insurance is a hybrid option that offers the benefits of both fully insured and self-insured plans with reduced risk. It is an excellent solution for employers who want to save money, have more control over healthcare costs, and customize their plan to meet their specific needs.
Before we wrap up, I want to delve deeper into the structure of the premiums you pay in a level-funded health insurance plan. As mentioned, the premiums are divided into three components: plan administration, stop-loss insurance, and a claims account. Similar to a fully insured plan only you have more transparency in to how your money is being spent.
Plan Administration is managed by a Third-Party Administrator (TPA). They shoulder the burden of the daily operations linked to your healthcare plan, making your life easier as you focus on running your business. From handling claims payments to providing cost management reports and serving your group members with stellar customer service, the TPA is your go-to aid in navigating the healthcare landscape.
Moving on to the second part, Stop-Loss Insurance is your financial safety net. When your group experiences higher than anticipated claims, the stop-loss insurance jumps into action. It protects your company's finances and ensures you're not caught off guard by unexpected claims, thus limiting your exposure.
Lastly, the Claims Account is your money manager in the healthcare world. This account holds the funds used to cover healthcare costs incurred during coverage. The beauty of the level-funded plan is that you only pay for actual costs your employees incur. This component helps you keep an eagle-eye on your cash flow, making sure every dollar spent is accounted for.
Together, these three components form the engine that powers the financial wheel of your level-funded health insurance plan. They ensure your money works efficiently and goes exactly where it needs to, providing predictable costs, potential savings, and allowing you to focus on running your business.
For more on stop-loss insurance, check out this article: https://www.linkedin.com/pulse/stop-loss-contract-terms-101-plus-4-ways-enhance-your-westermayer--4zz5e/?trackingId=2VpOK0VQQEir5VxDESEtrQ%3D%3D
