Small employers are becoming more irritated with the traditional Affordable Care Act plans (ACA, PPACA, Obamacare). If you have less than 100 employees, level-funded group health insurance could be for you. It can be a solution that puts rewards back in your bank account and gains you some flexibility.
It doesn’t seem fair that the employer works hard to manage their claims favorably and encourages employee preventative care options (wellness programs, generic medications, telemedicine) without recognition from the carrier. Instead of rewarding the small business employer for a positive claims experience, the savings rewards go back to the carrier. Also, the flexibility of the healthcare plan designs offered by traditional medical insurance carriers is limited.
Here are five main benefits of a level-funded group health insurance program:
Cost Savings, Over Traditional or Self-Funded
It’s true that fully insured health plans remove most of the risk from the employer. But as a result, the cost of the plan is much higher. And while the cost of a fully insured plan is predictable for the plan year, rates can – and will – rise in subsequent years should your claims exceed those forecasted by the carrier.
On the other hand, a self-insured plan leaves the most risk with the employer, but also has the greatest chance for producing savings in the form of claims being lower than premiums.
Level-funded health plans attempt to combine the best of both worlds, making partial self-funding a more viable option for a larger portion of employers, such as small businesses. They also reward the employer by giving a portion of unused claim dollars back to the employer to reduce premium costs for those groups whose claims are running well.
Plan Design Flexibility
Level-funded and self-funded health plans also provide employers with far more flexibility in plan design and are exempt from some ACA regulations. such as the requirement to offer essential health benefits or the requirement to follow the three-to-one rating formula. Additionally, self-funded plans give employers access to invaluable data that can inform plan design, such as claims information, unit cost of healthcare statistics, utilization frequency, and prescription data.
Different Regulations Than Traditional Plans
Because of an ACA exemption, level-funded and self-funded health plans (even for small groups) enjoy the benefit of not having the same regulatory requirements as traditional, fully insured plans. Oftentimes, this means a lesser administrative burden on small companies that don’t have the same staffing resources as large employers. Therefore, level funding helps reduce overhead expenses.
Wellness Incentives Rewards
Many carriers offer walking programs, discounted gym memberships, preventative care rewards, and smoking cessation programs. They actually reward employees for achieving these goals and even contribute money to the employees that they can use to offset their out-of-pocket costs.
Reduced or Free Telemedicine
Carriers also usually offer a reduced-cost or free telemedicine program to allow employees to call a registered physician 24/7 that will diagnose simple medical conditions and prescribe medications over the phone or internet.
Email me, Dan McNair, RHU, or call me at 630-980-2111 to learn more about this great approach to healthcare affordability.