LEVEL FUNDED HEALTH INSURANCE FOR SMALL AND MID-SIZED GROUPS
As rates, requirements and ACA taxes continue, American health insurance carriers have created health plans to help employers find affordable health plans for their employees. One that has proven most successful is a level funding strategy blends the simplicity and protection of a fully insured plan with the flexibility, ACA avoidance and opportunity to share in claims experience gains of a self-insured health plan.
The success of a plan like this for your company begins with underwriting, if you are a group with good claims experience you may be able to save a lot of money. For groups with under 50 employees you are subject to the ACAs community rating and the ACA limited plan designs (dependent on state). Community rating means everyone pays the same rates regardless of your group’s health, male/female ratios and type of industry. For larger groups, while you are underwritten on these factors, you are still pooled with many other groups and if you have a good claims year there are no refunds for overpaying for your coverage.
Level Funded health plans give you the protection of a fully insured health insurance premium meaning that is the most you can pay regardless of your claims experience. The big difference is premiums are broken into fixed costs (administration and reinsurance) and claims costs (money to pay your claims). The claims funding is where you can receive money back if your claims come in less than expected. In the event of a bad claims year you can expect an increase in rates just like you would in the fully insured world. The difference is, most of that increase will be going into the claims funding bucket and in the next year if claims return to normal, you will get some of that increase in premiums back.
Another big difference is the ability for small groups (under 50 employees depending on state) to have flexibility to build plan designs to meet their needs rather than to meet the ACAs rigid bronze, silver, gold & platinum requirements.
Sound too good to be true? For many it will be because you have to go through underwriting to qualify. If the carrier is going to give you money back in good claims years and eat the losses in bad years they want to make sure and work with healthy groups. Fortunately, it has gotten easier to get your employees through underwriting with the simplified Milliman Rx reporting. Carriers can now order data about your employee’s prescription usage and are making underwriting decisions based on that rather than having all your employees fill out health statements.
Who are these new plans designed for? We can now get quotes down to 10 enrolled employees. Not all carriers are going this low and most want 25 enrolled. This also depends on which state your business is located in. Regardless, there are new options for you to consider and we would like to show you how it works and if this is a good fit for your company.
If you think your group is healthier than most, you should definitely look at this option.
Call today for more information 212-365-4553 or email us