Level-funded plans have surged in popularity over the last five years, earning their spot as a staple option for companies of all sizes.
Level-funded plans, often referred to as “self-insurance hybrids,” merge the benefits of a fully insured plan with the cost-saving perks of a self-insured plan. Essentially, every month employers pay a set amount to cover administrative fees, the maximum amount of expected claims based on underwriting projections and embedded stop-loss insurance. Then, at the end of the year, refunds are allotted if total claims amount to less than what was paid for. [1] This allows companies to only pay for the healthcare costs that were actually incurred by employees. However, as opposed to an entirely self-funded plan, it also allows companies to plan for expenses, rather than paying for individual claims as they come.
The subsequent savings can be substantial. As Michael Levin, CEO and Founder of Vericred, noted in a BenefitsPRO article, “…[With a level-funded plan] you may be able to save your client up to 30 percent on its health care costs, an enticing opportunity for any small business.”
That said, to provide a true value-add to employers, brokers shouldn’t stop at simply offering level-funded plans. For starters, they should also offer level-funded plans with multiple carriers. This allows employers to more easily shop for their preferred rate.
Additionally, once a company decides to utilize a level-funded plan, brokers should tap into technology to make the process more efficient. In all cases, level-funded plans require employees to answer detailed questions about their health history. Typically, that means employers have to make their employees fill out various tedious and redundant forms. The process can literally take hours. Taking the time to locate technology partners who cut this process down to a single health questionnaire will equally benefit the broker, the employer and the employee.
Overall, as always, brokers who combine cost-savings, vast options and efficient technology solutions will continue to stand apart and grow their business. This is only increasingly true in today’s world of steadily rising healthcare costs. As a broker, it is beyond crucial to truly understand the market, including the technology solutions that are available to help meet client needs.
Ease is considered an early adopter of level-funding plans. Currently, the Ease platform uses proprietary technology to cut paperwork down exponentially. Additionally, Ease works with various carriers to offer level-funding, enabling clients to shop for the best rates.
[1] http://blogebsg.com/wp-content/uploads/2014/03/Level-Funding.pdf