Level Funded Plans Might Lower Your Group Coverage Costs

A doctor holding a pink piggy bank and money in a level funded scenario.
May 24, 2023

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 these plans are and how they can benefits your business in hopes to achieve lower cost and better benefits 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.
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.

The Benefits

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 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  plans, contact us today. We’ll walk you through the ins and outs.

 

Frequently Asked Questions

What are Level Funded Plans?

Level funded plans are partially self-funded insurance plans that allow employers to only pay the health care costs their employees actually incur, rather than paying high premiums. They can be suitable for groups with as few as five employees.

How do Level Funded Plans differ from fully insured coverage?

Unlike fully insured coverage where you pay a monthly premium to a commercial insurer, with level-funded plans, employers pay a set monthly amount to a healthcare services company. This covers administrative costs, stop-loss insurance, and actual employee health costs. At the year’s end, if employees remain healthy, the employer can receive a rebate.

What is stop-loss insurance in the context of Level Funded Plans?

Stop-loss insurance is a safety net in level funded plans that covers unexpected health costs. For instance, if an employee needs an organ transplant or contracts a severe illness, the stop-loss insurance will handle those unforeseen expenses.

What are the benefits of Level Funded Plans for employers?

Level-funded plans are great for companies with healthy employees. Benefits include different rates than community rating, the potential to get unspent premium back, customized health plans for employees, and exemption from some federal healthcare laws & health insurance taxes.

Can all companies avail of Level Funded Plans?

No, companies can be denied coverage if a member is unhealthy. However, these plans undergo underwriting, so rates fluctuate based on the health of those who enroll, rather than being based solely on location.
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