What you need to know
About level-funded health plans
Why level-funding for small businesses?
For years, large organizations have used self-funded health plans to provide coverage for their employees. In this model, employers set money aside to pay employee healthcare claims. Because these plans take into account the health of each employee and avoid some of the red tape associated with traditional insurance, they typically cost less for employers and employees.
While self-funding may make sense for large organizations that can manage month-to-month swings in employee healthcare costs, they can be risky for smaller enterprises. That’s why small businesses typically rely on traditional insurance, which is predictable, but significantly more expensive.
Lower costs, greater predictability
Level-funded plans draw on the best features of both types of coverage. They achieve lower costs through self-funding, they involve a predictable, flat monthly fee, and they protect organizations from higher-than-expected costs. Even better, if costs come in lower than projected, employers get 100% of the surplus.
How it works
Employers start by choosing from a variety of plans and paying a low, flat monthly fee.
If the actual cost of claims is lower than projected
the employer gets 100% of the claims account surplus to keep or put towards the next year.
If the actual cost of claims is higher than projected
the employer only pays the projected amount and is protected with built-in stop-loss insurance that pays for overages.