As the healthcare environment evolves, so too does the market for health plans and health plan services. Carriers that once limited their focus to large group coverage are now finding ways to cater to smaller groups – such as level-funded health plans that are growing in popularity with small (serving 10-25 individuals) and mid-sized (serving 25-50 individuals) groups for their unique employer-protectant benefits.
Level funded health plans offer fixed monthly payments and, unlike their self-funded counterparts, aren’t subject to state premium taxes. They are required to have stop-loss insurance, which protects the employer in the event claims paid exceed projected costs.
The fixed monthly payments that come with stop-loss insurance are beneficial for employers and employees alike because they do not fluctuate based on claims activity. Meaning there are no extra charges if claims are high, so employers will never have to pay more than the maximum monthly cost. While self-funded health plans are often criticized for the employer’s potential to lose money, a level-funded plan eliminates this risk.
For example, if an employer has an exceptionally low claims year, the carrier reimburses the remainder. However, if claims paid by the carrier exceeds the employer’s contribution, the difference is settled at the end of the year.
Additionally, employers can choose from varying levels of stop-loss coverage, which includes both aggregate and specific stop-loss insurance. Small groups have the option to choose aggregate stop-loss only, which sets a maximum claim dollar exposure for a group based on a percentage of expected claims.
So how do you know if a level-funded plan is right for your customer?
The best way to answer this question is to know the medical makeup of the group. Groups that have a predictable number or low number of claims each your benefit the most from level-funded plans.
If you are unsure of the medical makeup of a group or are dealing with a new customer, HealthPlan Services (HPS) can conduct a level-funded check and provide feedback to identify if your group is a viable candidate prior to committing to a level-funded contract.
If you are still unsure about which type of plan is right for your customer, HPS can help to renew current customers and find new customers, increasing market share and reducing acquisition costs.