Is my Company Best Suited for Level Funding?

December 21, 2017 | Tina Pelland

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  Level-funding employee health care has become a popular option for small and medium-sized businesses who are looking to increase profitability. However, as popular as this benefit option has become, there is still the question of “What type of company is best suited for a level-funded health care program?”.  As a provider for level-funded programs, we have decided to address this popular question in this week article.

  What is a level-funded healthcare program?

  First, let’s start by making sure we all have a clear understanding of what a level-funded health care plan is.

  A Level-funded healthcare plan is a hybrid between a self-funded plan and a traditional plan. Employers pay for all coverages and claims out of pocket, however, rather than paying as they occur, employers pay a monthly premium. At the end of every fiscal year, if the total cost of claims is less than the amount paid,  funds are refunded. If costs do exceed the total premiums paid, the must-have stop-loss policy will be activated. Ensuring that employers and companies do no lose more than they have already paid.

  What kind of companies are best for Level Funding health care benefit plans?

  Any small to medium size business can utilize a level-funded health care plan. Company size can be as small as ten employees and as large as one thousand. However, we recommend that companies have at least 50 employees, to make using a level-funded plan beneficial. There are no industries that especially thrive using level funded plans, as the plans focused on employees which vary per company no matter the industries. Businesses that see the best results from utilizing a level-funded plan have employees with the following characteristics:

  1. General good health along with a healthy lifestyle
  2. Young to middle-aged workforce
  3. No chronic or long-term illness (This can vary based on the size of your company, but the less, the better)
  4. Actively participate in an employee wellness program

   

  How does my company benefit from having a level-funded healthcare plan?

  The benefits of having a level-funded healthcare plan are similar to those of a self-funded or self-insured healthcare plan. First, you’re not locked into a traditional plan allowing you to customize your plan based on employee needs and preferences. Second, you can utilize TPAs, giving you full-time healthcare administration and valuable, actionable insight. Lastly, level-funded plans are less costly than a traditional HMO or PPOs, creating a better opportunity for profitability.
   

  Some benefits of a level-funded plan do differ from a having a self-funded plan.

• Possible Refund at the end of the fiscal year that can be up to 100% (typically ranges from 30% – 40%) of premium costs, minus administrative service fees and taxes.
• Predictable spend for healthcare costs, making budgeting and cost analysis easy.
• A must-have stop-loss policy, which ensures if costs go beyond the premiums already paid, employers do not pay even more.

 
View our Level Funding SmartSheet to learn more: www.varipro.com/what-is-level-funding/