There’s a trend within the health care industry that combines the appeal of increasing budget control and decreasing financial risk for employers. That trend is level funding, and it may be just what you’ve been looking for.
It’s fair to say that level funding is a hybrid financial strategy in health benefit planning. Similar to self-funded health plans, level funding (also called level funded health care plans) is facilitated with the help of a TPA. Level funding differs from self-funding however in that an employer pays monthly premiums throughout the policy year. The amount paid each month covers the cost of claims, administrative services, and embedded stop-loss insurance in managing the policy. The predictability of these monthly payments proves beneficial for organizations seeking to control their budget and maximize savings opportunities while incurring little to no risk in the process. An additional unique feature of level funding is the potential of receiving a year end refund if the total paid in monthly premiums exceeds what is paid out in claim coverage.
Clients receive claim information on a regular basis indicating how claim funds are being spent. TPA shares valuable insights with data while identifying plan updates and employee education opportunities.
Monthly payments mean budget control with no fluctuation due to claim payments.
Plans are customized to meet specific financial goals while the addition of stop-loss coverage reduces risk throughout the policy year.
No ‘off the shelf’ plans with level funding, each plan is customized to meet specific client needs.
Q: What kinds of companies are best suited for level funding?
A: Level funding works best for companies that are:
Q: How exactly does reimbursement work?
A: If, at the end of the policy year, the total dollars spent on claims is less than the total monthly premiums paid, clients receive a refund check for the overage or apply the amount in renewing their policy. If the opposite is true, stop-loss coverage kicks in and protects clients from having to pay the balance difference.
Additional SmartSheet topics are available on the Educational Resources page.