Level Funded Plan Guide
Level Funded Plan Guide
Offering high-quality health coverage is a key aspect of attracting and retaining high-level employees, and level-funded health plans make it possible for small businesses to provide comprehensive health coverage while minimizing their costs.
Level-funded premium (LFP) funding solutions are built with affordability in mind and offer the predictability of a fully insured plan combined with the savings of a self-funded plan. Low costs combined with other unique perks, like built-in wellness programs, make LFP plans an ideal option for small businesses that want to promote employee wellness.
Here is a complete overview of a level-funded health plan.
What is a Level-Funded Health Plan?
Level-funded health plans are designed to keep costs low and predictable. With these types of health plans, employers pay a fixed amount each month into a claims fund. When an employee makes a claim, these funds pay for all covered services.
The total amount the employer pays each month is based on an estimate of expected claim costs. If claim costs exceed this amount, the excess costs are covered by stop-loss insurance, which reduces the employer’s financial liability for claims that would otherwise deplete the claims fund. This allows the employer to continue paying out claims for other employees.
If annual claim costs are higher than expected, insurance providers will typically increase your stop-loss insurance premiums. If claim costs are lower than expected and you don’t use all the money you contributed to the claims fund, you’ll receive a refund — often in the form of plan credits — to make up for the difference. This ensures policyholders only pay for the healthcare costs they actually incur.
Level-Funded Premium Plan
LFP funding solution is designed for small businesses with between five and 100 enrolled employees.
This plan offers predictable, fixed premiums, team-based costs, potential refunds for unused funds, and stop-loss coverage that limits policyholders’ financial risk for excessively high claims. Level-funded plans stand out due to their built-in wellness programs.
LFP plans offer the features and services employees depend on while offering greater flexibility and cost predictability than other small business healthcare solutions.
Level-Funded Plan Features
In addition to the built-in wellness programs offered by LFP plans, policyholders can benefit from several great plan features, like:
- Stop-loss protection.
- Option to offer multiple plans to employees.
- 12/30 contracts.
Level-funded plans are designed to be affordable while offering flexibility and customizability.
Level-Funded Plans vs. Fully Insured Plans
Level-funded plans are comparable to fully insured plans in that they both offer consistent monthly costs, wellness incentives, and protection against unexpected claim costs.
However, LFP solutions stand out by offering surplus reimbursements at the end of the year if claim costs are lower than expected and by providing stop-loss coverage to reduce employers’ financial risk.
Ultimately, level-funded premium health plans can be a more affordable and flexible solution for small businesses with up to 100 employees.
Request a Quote
Level-funded health plans are ideal for small businesses that want to provide comprehensive coverage to their employees without incurring excessive healthcare costs. These plans offer predictable monthly costs, flexible plan options, and wellness incentives that employees and employers can take advantage of. Level-funded health insurance also includes stop-loss coverage to protect small businesses against unexpectedly high claim costs.
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.