Level Funding Can Keep Your Health Insurance Levelheaded
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5 Reasons Level Funding Makes Sense For Your Company
Level Funding is a great way to dip your toe into the waters of self-funding your company’s health insurance. It takes all the components that employers historically didn’t like in a traditional partially self-funded option, and makes them more palatable. Here are five reasons why it makes sense for your company:
- Predictability - Level funding offers preset monthly payments based off the number of employees you cover.
Even though it’s a self- funded plan, you won’t have a monthly fluctuation due to claims experience.
- Savings potential - If your claims are better than the expected annual claim amount determined at the beginning of the policy year, you can receive typically two thirds of those remaining unused claims dollars back in a premium credit for future bills.
If your company’s expected annual claims run worse than expected, the insurance carrier can’t come after you during the year for more money above the pre-set rates.
- Terminal liability protection - Terminal liability protection is already built into level funded plans.
If you decide to leave the level funded program, your company won’t be subjected to paying any runout claims that happened during the coverage period, but weren’t paid until after the coverage period ends.
- Detailed claims reporting - Because a level funded plan is technically self- funded, your company will have access to monthly, detailed claims reporting.
This will help you monitor the plan, as well as be able to pinpoint what type of claims are driving most of the expense. This is great data for any company to have. It’s especially helpful to companies with under 150 people on the plan that typically don’t have access to this kind of reporting when they’re under a fully insured design.
- Plan design flexibility - Level funding allows you to pick the plan that best fits your employees, and make adjustments to your plan based on the data you receive in the claim reports.
There are more and more insurance companies starting to offer their version of a level funded insurance plan. Each individual insurance company has their own subtle nuances, but ultimately they’re very similar and can be very beneficial.
Please contact myself or another Assurance team member if you’re interested in level funding or have any questions.
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