It has always been challenging to offer viable solutions for small employers who are searching for lower premiums and flexible plan designs in medical insurance. This is especially true in New Jersey as premiums are strictly developed through community rating – where employers with 2-49 employees are “pooled together” within the state. The typical argument involves the healthy group that incurs a few low-cost claims and winds up paying the same premium as a comparable non-healthy group incurring many high-cost claims. Perhaps that may seem unfair to you – and you would be right!
Introducing Level-Funded Plans – THE solution to address companies that want to be charged appropriately for their own claims and their own experience. This unique approach offers the benefits of self-funding along with financial protection to manage risk. Thus, instead of pre-funding the cost of insurance each month for claims that may or may not occur – you only fund a personalized maximum claims liability per month. If claims exceed that amount, stop loss insurance pays the overage and, should claims come below that amount, you ultimately wind-up sharing in the savings.
Like Fully Insured premiums, these Level-Funded plans have three separate components billed as one monthly premium to the employer. The first component is the Self-Funded Medical cost where the type of plans and covered services are established by you and pay for benefit expenses to your employees. The second component is the Third-Party Administrator cost that handle services such as claims processing, billing, reporting, enrollment, plan materials, customer service, etc. And the third component is the Stop Loss Insurance cost that protects the employer from catastrophic claims incurred by an enrollee (Specific Stop-Loss) and overall protection from all participant claims exceeding a certain dollar limit (Aggregate Stop-Loss).
To Simplify: Traditional Funding vs. Level-Funding
Subject to State Mandates Generally Not Subject to State Mandates
Limited Plan Design Options More Flexible Benefit Designs
No Return on Premium Shared Savings on Surplus
Financial Protection Stop-Loss Protection
Community Rating Lower Monthly Cost based on Expected Claims
So – when deciding if Level-Funding is right for you and your company you only need to ask:
- Is more flexibility in health benefits plan design important to my employees?
- Should I be entitled to share in the savings if my employees remain healthy?
- Do I want to attract/retain excellent W-2 and 1099 workers for my company?
- Why would I not consider this approach with Financial Predictability built in?
SAVINGS – CONTROL – SIMPLICITY – NO RISK – WIN/WIN
Reach out to Strategic Employer Planning Today to begin the conversation. To Anticipate the Savings!