Level-Funded Group Benefits Plans of Health, Dental, Vision, etc.
The distinctive of Level-Funded Benefits Plans is that an employer’s claims liability risks are determined by underwriting each group Plan participants medical health histories and conditions vs. using generalized claims experiences for groups of similar size. Therefore, risks are better known, up front, so that rates can be more accurately based upon a clearer understanding of actual likely medical claims that are expected to be incurred over the Plan year.
Level-Funded Plans also consist of overall group (Aggregate), and per-participant (Specific) Stop-Loss Reinsurance coverage that serve to cap and limit all Plan liabilities.
The worst case scenario to an employer is that it wouldn’t receive any money back at the end of the Level-Funded run out period (6-months run out past the end of one year), if actual claims exceeded the allocated premiums paid throughout the year to “Level Fund” said expected claims.
On the plus side of the equation…since the actual claims are known by the TPA or Plan provider by the Plan year end, then any excess funds not used to have paid expected claims that were never incurred, may instead be applied to lower premiums for the renewal or next Plan year.
Not all groups are a great fit for Level-Funded arrangements. Those groups with employee participants that for the most part have excellent health histories (typically size 5 up to 75) are ideal, because all participants must fill out individual health history applications that are used to generate composite, level rates, for the Group Plan participants.
On the other-hand, if your Group has, for its size, too many participants with severe medical histories with chronic conditions, then Level-Funded or even Self-Funded arrangements may not be a good fit for you. However, for groups of approximately 75 to 100+ participants, where the risks can be more widely spread out over more participants (larger groups), then going the Self-Funded route may be preferable.
Again if the group consists of all, or mostly healthy persons relative to your groups overall size, and performs well with low claims experience, then the group employer stands the potential of getting back 5-30% of its’ level funded “premiums/rates”; namely, the expected claims that were never incurred but were nonetheless funded for via the Level-Funded Plan.
Level-Funded Benefit Plans Overview:
- With “Level-Funded” plans the employer pays a “level” premium per month as determined by plan design, typically one that is set by the Third Party Administrator (“TPA”) or issuing company.
- All Health Insurance Plan Designs are ACA compliant, meaning they have all the provisions in the ACA mandate for preventive services, etc.
- The Insurance component consists of both an overall group (Aggregate) and Individual (Specific) Deductible Stop Loss, that kicks in once one or several employees exceed a certain dollar amount in claims.
Please contact us for quotes and Plan Designs most appropriate to your business:
800.482.5347 / Info@LeagueFinancial.com
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