4 Ways Level Funded Health Insurance Is Good for Your Bottom Line
Level funded health insurance is a combination of a traditional small group health plan and self-funded employee health insurance, making it an ideal level funding insurance choice for small- to mid-sized businesses. If you want to minimize risk where employee health insurance is concerned while also keeping costs low, a level-funded plan can get the job done.
Level-Funded Health Insurance Can Save Your Company Money
A group-plan alternative to fully insured plans, level-funded health insurance plans are sometimes called “partial self-funding.” Whatever title you choose to give this type of benefit, the bottom line is that a level-funded health insurance plan is good for your company’s bottom line. Here’s why:
- It’s easy to maintain a health insurance budget. Expenses for a level funded health insurance plan are spread evenly over 12 months (which creates the name “level”). The set monthly premiums are divided three ways, with a third of the premium used for employee claims, another third for plan admin, and a third to pay for stop-loss coverage to protect your business from self-insurance risks. Health insurance can be a predictable expense which makes budget balancing easy (at least for this portion of your budget).
- You have insurance on your health insurance. The stop-gap coverage that typically comes with level-funded plans – also known as stop-loss insurance or reinsurance – protects against cost spikes. Should you weather an especially unhealthy season for employees, or should an employee or two incur unexpected but pricey healthcare costs over the course of a year, your bottom line won’t suffer if claims go over the claims fund. The stop-loss insurance takes care of any overage. Even if there is a very large claim at any point, your company will not receive a bill to cover additional health insurance costs.
- A level-funded plan is like a cash-back credit card. If the level-funded premium paid into your claims fund goes unused by the end of the calendar year, your business will get a refund.
- You’re not at the mercy of traditional group plan policies. Sometimes, small businesses feel the burn with group health insurance when premiums are based on a broad sampling of people like traditional group policies. Level-funded plans evaluate a company’s employee risk pool only, which can lower risks and create lower-priced plans. This company benefit is serious incentive to keep your employees healthy to keep premium costs down, which may encourage you to invest in employee gym memberships or in-office yoga courses to encourage body wellness (and fewer missed days of work).
If you want to protect your investment in healthcare costs for your employees, consider a level-funded health insurance plan. Contact The Benefits Group to learn more about the pros and cons of this group healthcare insurance option and whether it will work for your small business – and your bottom line.