For most of your clients, the worry over health care and plan costs have dramatically increased due mostly in part to the events that have unfolded over the past 2 years. This is especially present with constant reminders of the “Great Resignation” and Inflation at a 40 year high. This is prompting a number of employers and business leaders to explore numerous funding options in hopes of maximizing healthcare dollars.
Fully insured health plans have long been chosen for the repose they offer. However there’s a growing sentiment of dissatisfaction with employers as it relates to the higher costs associated with that peace of mind. While the dissent with fully insured plans may be building, the idea of making the move to a self-insured plan may be too large of a risk for some of your clients; especially given the unpredictability, possible risks to the organization, and potential negative impacts on available cash flow.
At Coterie Advisory Group we hear constantly from our broker partners of both potential and existing clients needing the advantages of self-insured health plans while maintaining financial certainty with reference to budgeting concerns. More often than not, level-funded health plans are the answers their clients are looking for. Level funded plans allow organizations and employers the ability to garner the financial benefits and plan design flexibility available in a self-insured plan while also maintaining the lower risk and stable cost features associated with fully insured plans.
Level-Funded Health Plans Are Not Just a Bridge From Fully Insured to Self Insured
Fully InsuredLevel-Funded Self-Insured
Traditionally employers pay preset monthly premiums directly to a health insurance carrier.
Premiums remain fixed during your plan year regardless of actual claims experience.
Premiums are determined annually during renewal with the insurance provider.
Employers pay a fixed, or “level,” monthly payment throughout the year which are typically lower than those of fully insured plans.
Payment includes stop-loss protection against unexpected claims.
If claims are lower than anticipated, your client gets a refund.
The employer assumes the financial risk of paying for claims as they occur.
Employers must estimate & budget annual costs and may purchase stop-loss to help cover unexpected claims.
Based on actual claims experience, cost can change from month to month.
How Do Level Funded Plans Work?
With a level-funded plan, an employer pays a preset monthly amount to cover costs for:
Estimated Employee Claims
Stop-Loss Insurance Coverage
At the end of the plan year, if the total claims costs are greater than the claims, the stop-loss insurance coverage covers those extra costs—meaning the employer is 100% protected.
Alternatively, if the total costs of claims are lower than expected, the employer or organization will typically receive all or a significant portion of the unused balance as a “refund” at the end of the plan year with the exception of stop-loss costs and plan administration.
What Advantages are there to Level Funded Plans?
Better Cash Flow: Level-funded payments are spread evenly across a 12-month period. A predictable payment structure allows for easier cash management. The inclusion of stop-loss coverage protects against unexpected costs due to higher or catastrophic claims.
Company-Based Risk Assessment: Level funding evaluates plans on a company’s own claims experience, whereas traditional fully-insured plans use a broad community group to assess risk when calculating premiums. Because a company’s associated risk is traditionally lower than the general population, this often results in lower-cost plans.
Opportunity to Earn a Refund: A primary selling-point for most businesses and organizations, level funded plans allow employers to recover savings through a refund. In most cases, this is reflected when a business experiences a “healthier” than expected year. This is an advantage directly tied to Level Funded Plans and not found with traditional fully insured plans.
Transparency: Level-funded customers receive reporting on plan utilization that identify areas of concern. These additional insights create opportunities to better target plan design changes while educating and further engaging employees to make better health decisions resulting in further helping in reducing utilization costs.
Fewer Regulations and More Flexibility : In most cases, plans meet ACA “Minimum Essential Coverage” and "Minimum Value" definitions, easily replacing traditional plans.
Pros and Cons for Plan Types
There are many factors to consider when recommending health plans to your clients. Many of the options presented can be answered through a traditional Pro and Con List. Such as the one below.
Which Approach Is Right for Your Clients?
Level-funded plans may position you to give your client more control over one of the largest expenses in running their business. A health plan design created to meet the unique needs of your clients business that positions them to collect and share in the benefits of cost containment, wellness activities, and improved ability to attract and retain talent.
We offer Affordability Based Medical Insurance Plans
Coterie Advisory Group’s Fundamental Care® programs are Affordability-Based Medical Plans which are designed for various niche-markets, including: small business and their employees, part-time, hourly, seasonal employees at enterprise-level companies, independent contractors, gig-economy workers, and association members. Fundamental Care is designed to meet the needs of the underserved, by providing access to unique and affordable health insurance benefits on a guaranteed issue basis. Limited-Day and Limited-Benefit Indemnity plans can be customized and structured with affordable premiums and no deductibles. Coterie Advisor's can also provide Minimum Essential Coverage (MEC) and bronze-level Minimum Value Plan (MVP) options for client's needing a solution for their full-time equivalent employees. The combined offering of the Fundamental Care plans is unique to the marketplace. Through Coterie's Affordability Based Medical Plan Strategy, the plans not only provide needed healthcare to the insured employees but also offer companies a strategy to improve recruiting and reduce turnover by rewarding a carve-out class or more-tenured employees.
Fundamental Care offers two Affordability-Based Medical insurance options which can assist:
An employer-sponsored, level-funded, Limited-Day Health Plan for small to mid-size employers and carve-out classes of large employers. Plans cost 30-40% less than HDHPs with no deductibles. A near-comprehensive plan that both employers and employees can afford.
THREE LEVELS OF PLAN
An affordable Bronze MVP plan – with no deductible
An affordable mid-range MEC plan with limited days of hospitalization– with no deductible
A Value priced outpatient expense MEC plan- with no deductible
A Limited-Benefit Indemnity Plan for large employers with part-time, hourly, and seasonal employees; and for associations and affinity groups. An affordable option for the uninsured that provides coverage for basic medical expenses.
Available with or without Minimum Essential Coverage (MEC) and Minimum Value Plans (MVP)
Both can be customized and structured with affordable premiums and no deductibles. The plans are high in potential coverage, guaranteed issue, and include upfront, day-one benefits.
Coterie Advisory Group, Inc. is a National insurance program manager and consultative advisor who delivers Affordability Based Medical Plan Strategies to help benefit brokers, consultants, employers, and associations in the benefits industry.