Health Care
Oct 27, 2021

Are Level Funded Plans the Answer?

Sponsored Content provided by Insights On - ,



The cost of health insurance coverage has many employers wondering what they can do to control rising costs while offering their employees the financial protection of “good insurance”. Despite the ability of business owners and their leadership to effectively manage every other aspect of the business, making smart decisions about health insurance benefits can be one of the most daunting tasks facing the business each and every year.

Across the country the dreaded time of year; awaiting the news from their broker of what the double-digit increase in cost will be to offer the same if not less attractive benefits to their employees. With each passing year more and more employers are asking themselves if this is the year that they consider self-funding.

According to a 2020 Kaiser Family Foundation study, 67% of U.S. employees are now in the self-insured plan which is an increase of 3% since 2017, of course, these tend to be larger employers. Smaller employers are increasingly looking at their options a bit closer and they are finding that they have choices including the fact that a Level Funded plan might be a first step towards being self-funded.

HEALTH INSURANCE COVERAGE OFFERINGS FALL INTO THREE CATEGORIES:

· A Fully Insured Plan is what most
of us think of when we think about employer-offered health insurance. The employer and employee pay a monthly premium, the employee gets an insurance card, and the insurance company processes and pays all claims.

· A Self-Insured Plan has been around for many years. Nearly opposite of Fully Insured, an employer sets aside a pool of money to pay for expected medical care costs and accepts the risk that the cost will not be higher than the pool of funds set aside. Given this risk, the employer will often purchase “Stop Loss” insurance to cover amounts exceeding the pool.

· A-Level Funded Plan is less familiar to most employers and employees. These are plans structured very similarly to Self-Insured Plans but have key differences with the most important being that stop-loss coverage is initiated at a much lower cost threshold than traditional Self-funded stop loss.

With their ability to be tailored to the specific population of employees and the lower cost threshold, Level-funded plans are becoming the stepping stone that many smaller companies have needed to save on insurance premiums immediately while also putting them on a transitional path towards becoming Self-funded. The transparency of provided claims analytics data gives employers direct insight into what benefits package makes sense for their employees versus potentially costly items that employees are less interested in or don’t need. It also allows the employer to control costs due to lower premiums and the opportunity for shared savings that have traditionally comprised the roughly 25% profit appreciated by insurance companies selling a Fully Insured Plan.

Benefit management consultants can often provide employers with objective guidance on what health coverage option makes the most sense and assist leaders in charting a path to a more cost-effective model.

Other Posts from Insights On

Ico insights

INSIGHTS

SPONSORS' CONTENT
Atromitos micheallegady headshot

Straight Talk on Tech: Implementing IT in Health Care

Michealle Gady - Atromitos
Jasonpathfinder3

Finding Success in Succession Planning

Jason Wheeler - Pathfinder Wealth Consulting
Jc300 dsc 2735

Are we ready for the Endowment?

JC Lyle - Wilmington Area Rebuilding Ministry

Trending News

New Owners Announced For South Front Street Restaurant

Staff Reports - May 23, 2022

Coastal Entrepreneur Of The Year For 2022 Named

Johanna F. Still - May 24, 2022

Former First Bank Exec Named CFO Of New Hanover County

Staff Reports - May 23, 2022

World-famous YouTuber Spotlights Two Local Restaurants

Jenny Callison - May 25, 2022

Governor's Office Honors Brunswick Co. Volunteers

Staff Reports - May 24, 2022

In The Current Issue

Riverlights Preps For More Development

Realtor Kathy Merlo and her husband, Tony, moved to Riverlights two years ago, into a Trusst Builder Group house facing a 38-acre lake....


What’s Next For Wilmington East’s $315M Windfall?

Offshore wind, which can generate electricity, represents an untapped economic frontier for the region that has bipartisan support....


Info Junkie: Aariene Hansley

Aariene Hansley, entrepreneurial academy education coordinator at business development firm Genesis Block, shares her top info and tech pick...

Book On Business

The 2022 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

Trying to Grow a Business?
2020 Health Care Heroes
2020 WilmingtonBiz 100