Level Funded/ Self-Funded
What is a Level Funded Group Health Plan?
This is a self-funding plan that allows a company to save money by paying the cost of small claims, but still have the financial protection against large claims.
With Fully Insured group health plans, the business pays the insurance company a fixed amount of premium. The insurance company then pays for all medical claims. If the medical claims are lower than expected, the insurance company keeps the difference.
On a level funded plan, your company will have the option for receiving a claims refund if your claims are lower than expected.
How Level Funded Plans Work
The monthly premium includes the estimated health care claims plus fixed-costs. Fixed costs are admin fees, stop loss insurance, and broker commission. This total cost is called the plan’s maximum liability, which means this is the most you are going to pay.
Part of the monthly payments go towards eligible claims. At the end of the year, the actual claims and estimated claims will be reconciled. If the actual claims are lower than estimated claims, then you are eligible for a claims refund. Most insurance companies will refund 2/3rds of the claims fund, some will refund the full amount.
What Type of Company can Benefit From Level Funding?
This arrangement can work for companies that have a healthier work force. It also can work with groups that have high dependent coverage and smaller companies that want to be underwritten. Companies that are looking to reduce health insurance costs can benefit as well.
With the passing of the Affordable Care Act, there is now a large amount of Level Funded plans available in Indiana. Carriers are offering a variety of plan designs and refund options. There are big differences from each carriers underwriting guideline. This all leads to more competition in the small and mid-size group market in Indiana. We are contracted with all the Level Funded carriers and are able to offer multiple solutions for your company.