With so many regulatory changes and cost increases year after year, sifting through each and every plan combination to pick the perfect fit for your company can become a daunting task. When renewal season comes around, most employers are seeking the same thing – cost savings. One of the big decisions a company must determine is whether they should choose to be fully insured, or instead, look into self-insured options. More and more companies are looking into self-funded and level-funded plans when looking to save money this renewal season.
Aren’t self-insured plans just for larger companies?
While self-funding has traditionally been a better fit for larger companies with more than 100 employees, smaller companies are now seeing the benefits self-funded health plans can provide, viewing it as a viable option moving forward.
With a self-insured plan, the employer is responsible for paying all of the health care costs plus administration costs, hence taking on more risks. On the other hand, there are several benefits of engaging in a self-funded plan like:
Cost-Savings: Self-funded plans are generally exempt from certain Affordable Care Act (ACA) taxes and other premium taxes, helping to lower the employer costs and increase cash flow.
Control: One of the benefits employers like most is the ability to see where there healthcare dollars are spent and who is spending them. Self-funding allows the employer full access to all claims information, which can help make important decisions moving forward like which plans to choose or how to educate employees on using the right services for them.
Flexibility: Employers can customize plans to fit their employee’s needs rather than buying into a one size fits all insurance policy.
So, what’s level funding?
Level funding is a form of self-funding, but allows the employer to pay a fixed fee each month. This plan is commonly seen as an option somewhere between being fully insured and self-insured. After the employer pays their monthly fees for a year, they are refunded any difference if they have paid more than they have spent. Employers with healthy employees are going to benefit most from these types of plans since there will be fewer and less costly claims.
Alternatively, companies who wish to protect themselves against unpredictable, catastrophic claims can do so with stop-loss insurance. Level funding is a great option for adding predictability back into the equation with a self-funded plan.
If you’re looking to save costs on your healthcare insurance this renewal season, it may be time for a change! Larger corporations have been taking advantage of the freedom self-funded plans can provide for some time now, and smaller companies are increasingly realizing level funding could be a perfect fit. If you’d like to learn more, or see if a self-funded or level funded plan is right for your company, contact our insurance experts today!