In the complex world of health insurance, understanding the basics can be a daunting task. The jargon, the complexities, and the myriad of options can leave even the most seasoned professionals scratching their heads. Whether you're an HR professional responsible for your team's health benefits or an employee benefits advisor trying to navigate the labyrinth of health insurance, I've got you covered. In this blog post, I'll take you on a crash course to help try and demystify "Level Funded Health Plans."

The Basics

What Are Level Funded Health Plans?

Level funded health plans are an increasingly popular choice for businesses of all sizes. These plans combine the cost control advantages of self-funding with the predictability of fully insured plans. Here's a simple breakdown of the key components:

Self-Funding: Unlike traditional fully insured plans, level funded plans involve the employer taking on the financial risk for their employees' healthcare expenses. However, they don't have to cover the full cost themselves.

Monthly Funding: Employers make a fixed monthly payment into a claims fund, which is used to pay for employees' healthcare expenses.

Stop-Loss Insurance: To protect against catastrophic claims, level funded plans often include stop-loss insurance, which kicks in when claims exceed a certain threshold.

Predictable Costs: The fixed monthly payments make it easier for businesses to budget their healthcare expenses, as they know what to expect each month.

Now that you have a basic understanding of level funded plans, let's dive into why they might be the right choice for you or your business:

Cost Savings

Level funded plans offer cost-saving potential. By self-funding, employers can avoid the profit margins that insurance carriers add to fully insured plans. This can result in significant savings in the long run.

Customization

These plans are highly customizable, allowing employers to tailor the benefits to their employees' specific needs. You have the flexibility to choose the services and coverage that matter most to your team.

Transparency

Level funded plans provide transparency into healthcare costs. Employers can see where their healthcare dollars are going, which can lead to better decision-making and cost management.

Risk Management

While employers take on some financial risk with level funded plans, stop-loss insurance provides protection against catastrophic claims. This combination allows for cost control and risk management.

Who Can Benefit from Level Funded Plans?

Level funded health plans are not limited to large corporations. They can benefit a wide range of businesses, including:

Small and medium-sized businesses

Non-profits

Startups

Educational institutions

Municipalities

Ready to explore level funded health plans for your organization? Here's a step-by-step guide:

Assess Your Needs: Evaluate your team's healthcare requirements, budget, and risk tolerance.

Find a Reputable TPA: A Third-Party Administrator (TPA) can help you set up and manage your level funded plan. They handle claims processing, compliance, and more.

Choose Your Benefits: Work with your TPA to select the right mix of benefits for your employees.

Secure Stop-Loss Coverage: Ensure you have adequate stop-loss insurance to protect your organization against large claims.

Educate Your Team: Communicate the new plan to your employees. Make sure they understand the benefits and how to use them.

Level funded health plans offer a compelling alternative to traditional insurance options. They provide cost savings, customization, transparency, and risk management. Share this knowledge with your network and help others gain a better understanding of level funded health plans. Together, we can make the world of health insurance a little less mystifying. 🌟