Choosing the right health insurance plan is an important aspect of putting together a comprehensive benefits package for your employees. Before choosing a plan, though, it’s important to understand what types of plans there are and what benefits they offer.
Level-funded health plans offer a midway point between traditional, fully-funded plans and self-funded plans. These plans can help employers cut costs while still providing exceptional health coverage to their employees.
At KSA Insurance, we partner with major carriers like United Healthcare, Cigna, Blue Choice, Blue Cross and Blue Shield and Trustmark to help businesses in South Carolina and across the southeastern United States find affordable health insurance plans that provide comprehensive coverage to their workforces.
Here’s everything you need to know about the best level-funded health plans, including the top three plans that business owners should consider.
What is a Level-Funded Health Plan?
There are three main types of health plan funding options: fully-funded, self-funded, and level-funded.
With level-funded health plans, employers pay a set amount each month into a claims fund. This monthly amount is based on an estimate of the cost for expected claims. Employers also typically pay a fee to a third-party administrator that assesses which claims should be paid and how much to pay out for each claim. These plans combine the predictability of fully-funded plans with the cost savings offered by self-funded plans.
At the end of each year, the insurance carrier will either issue a refund to employers (if the actual claim costs were lower than expected), or they will increase the premium on the employer’s stop-loss insurance if the claim costs were higher than expected.
What is Stop-Loss Insurance?
Stop-loss insurance coverage is an important aspect of level-funded health plans as it limits the employer’s responsibility for claims that exceed a specific amount. This coverage is the main difference between level-funded health plans and self-funded or fully-funded health plans.
If a covered employee files a claim that would deplete the employer’s claims fund, stop-loss insurance reduces the employer’s financial liability so they can continue to pay out claims for other covered employees.
The cost of stop-loss insurance depends largely on historical claims data and the number of employees that are covered by the employer’s health plan. If annual claim costs exceed the expected amount, then the employer’s stop-loss premiums will typically increase.
What are the Benefits of Level-Funded Health Plans?
Level-funded health plans offer several benefits to employers that want to offer high-quality health coverage to their employees.
Level-funded health plans offer:
- Predictable costs: Employers make predictable monthly payments toward their claims fund, which is a particularly desirable feature for employers that are used to fully-funded health plans.
- Annual refunds: If the annual claim costs are lower than expected, employers receive a refund for unused funds.
- Cost savings: Level-funded health plans can cut costs for both employees and employers, making them a cost-effective alternative to fully-funded and self-funded health plans.
- Fewer administrative duties: With level-funded health plans, the insurance provider typically covers pharmacy benefits, stop-loss duties, and other administrative activities, which helps lower the administrative burden for small businesses.
- Access your data: Employers that have level-funded health plans can access their data for more transparency into healthcare costs and claims.
- No claims liability to the employer: If an employee has an ongoing major claim, the stop loss insurance protects the employer from having to pay extra out of pocket if the cost exceeds the claims fund.
3 Best Level-Funded Health Plans
Employers looking for level-funded health plans should carefully research and compare several plans to ensure they find one that meets their coverage and financial needs.
Here are three of the best level-funded health plans for employers to consider.
United Healthcare’s level-funded health plans offer quality benefits at affordable rates. Plan rates are based on plan participants regardless of business size, and employers whose claims costs are lower receive an average refund of about $10,000. Employees can choose from a variety of provider networks, and these plans are exempt from many state premium taxes and Affordable Care Act regulations.
With a United Healthcare level-funded health plan, employees get access to several programs and services at no extra charge, including an online weight loss coaching program, 24/7 mobile access to doctors, and $0 copays for kids’ primary care physician visits.
BlueChoice HealthPlan of South Carolina’s Choice Level Funded plans include a variety of programs for medical, health, and chronic condition management. Plans can be customized to suit each employer’s unique needs.
Choice Level Funded health plans offer a wide network of doctors, hospitals, and other healthcare providers, making it easy for employees to access the healthcare and medical services they need.
Plans include value-added benefits like preventative dental care, pediatric vision care, and adult routine vision care. Members can also take advantage of discount programs for weight loss programs, hearing aids, fitness centers, and more.
Trustmark offers level-funding healthcare solutions for small to medium-sized employers. Employers whose costs are lower than expected can choose to receive a cash refund or credit that can be used to lower their costs in future months.
Employers can visit the Document Center to view reports showing how their healthcare dollars are being spent, and they can view monthly reports that summarize claim liability.
Trustmark works with employers to create tailored health plans that suit their and their employees’ needs.
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Level-funded health plans are a great choice for employers that want the predictability of fully-funded plans and the cost savings offered by self-funded plans.
At KSA Insurance, we partner with many major insurance carriers like Blue Cross, Blue Choice, and United Healthcare to help small business owners in South Carolina and across the southeastern United States find the right health insurance solution for them.
Contact us today to get a quote and learn more about level-funded health plans.