Level-Funded Group Insurance
Level funded health insurance plans have been around a while. Yet, as we meet with our clients, we have found that many companies and employees are not aware they exist, and they certainly do not know how they work. We created this page to help you better understand these plans that are giving our clients great health solutions to offer their employees, while also boosting their bottom line.
Traditional Vs. Level Funded Plan Coverage
Before we get started, let’s take a look at a recent case we wrote for our client. As you will notice, the benefit coverages of the level-funded plans work the same as traditional group insurance, utilizing similar carrier networks as your current provider. As you will learn, our plans are structured allowing for additional savings in monthly premiums, as well as the opportunity to earn a significant portion of the annual premium back at the end of the year based on your group claims.
Traditional Health Insurance
Traditional insurance is structured so that the insurance companies are protected from loss and also maximize profits. When you pay premiums, 100% goes to the plan and regardless of the claims that year, the company retains all of the premium. These plans allow everyone to participate in a larger pool to keep claims and costs lower, but it seems every year the premiums are going up.
Level-Funded / Hybrid Self-Funded Plans
Level funded plans are divided into three categories with roughly 1/3 of the monthly premium making up each category. The first is administrative costs. This pool of money is paid to the third-party provider who administers the plan. They ensure the plan operates smoothly by handling all policy communication and making sure claims are paid in a timely manner. The CSL (Stop-Loss Coverage) is an insurance policy that insures the plan against catastrophic loss. This coverage kicks in if the plan meets the per claim or total cap allowable for the plan year. This allows the plan to function much like traditional coverage and minimizes the risk of the business owner. The third pool of money is the claim fund. These funds are used to pay claims for the plan as they are incurred by the participants. There is a per claim cap as well as a plan cap. Based on the claims of the group, if you have money left in this fund at the end of the year, the group receives the unused premium back!