How to Save Over 30% on Group Health Insurance Premiums with a Level Funded Plan

For small businesses with less than 50 employees.

img

If you currently offer health insurance benefits through your business—you may be spending a lot of money to cover your employees who may only use their insurance a few times a year.

As some would say, “It’s health insurance—the rates are the rates.” 

In truth premiums are expensive and they continue to rise. But why?

Why is health insurance so expensive?

  • We’re getting older (more than 10,000 people turn 65 years old every day)
  • We’re prescribed more medication
  • Medical technology is more advanced
  • Federal and state benefit mandates

The expense of maintaining and insuring our health shouldn’t prevent people from taking care of themselves.

But it does.

In fact, 27 percent of Americans in 2017 say they have put off or postponed getting health care they needed because they couldn’t afford the necessary care—per a poll taken by the Kaiser Family Foundation.

And no matter how healthy or sick your employees are—you pay a set premium every month to protect them. And you’re typically locked into that rate for 12 months.  

This can be solved by introducing a level funded product within your business.

  Level funded plans are an affordable alternative to standard small group health insurance plans.  Compared to commercial health plans, level funding allows insurance carriers to underwrite for medical risk—you can find premium rates up to 30% less than what you’re used to paying.

  What makes level funding so special?

  You can tailor your employee benefits to the needs of your employees and get the opportunity to receive a refund on your premiums.

  That’s right.

  Level funded plans are the only health insurance plans that give you money back if you have a good claim’s year. When’s the last time you received a refund from an insurance carrier?

  Just getting reimbursed can feel like pulling teeth.

Keep talking…

Level funding is an ACA Compliant group insurance option for your business that combines the predictable costs of a fully insured commercial plan with all the advantages of self-funding.

But unlike a fully insured plan, where plans are age rated and you blindly pay premiums, level funding allows you to see exactly where your money is being spent.

And like self-funding—you have the opportunity to receive a return of premium following a good claims year. 

At the start of each plan year, you set aside funds to cover your maximum liability for the year and your premiums remain level each month—you never pay more.

Who fits the level funded model best?

  • Businesses with 5 to 50 employees
  • Businesses looking to save money on group health insurance
  • Businesses who can’t afford fluctuating monthly costs
  • Businesses looking to maintain a healthy lifestyle among their employees

Who is level funding not for?

  • Businesses with fewer than 5 employees
  • Businesses who have multiple employees with pre-existing conditions such as HIV or Multiple Sclerosis

Benefits of Choosing a Level Funded Plan:

Help your employees stay healthy and lower your out-of-pocket expenses.

Wellness programs are built into some Level Funded Plans including regular health screenings, gym and lifestyle training, and flu clinics—so incentivizing your employees to maintain good health is easy. 

Incentive based wellness programs from UHC All Savers include Rally Wellness, Trio Motion Program and HY Virtual Care.  

Cost Transparency

Wouldn’t it be nice to know how your plan is running mid-year as opposed to waiting for a renewal 60 days prior to your effective date?

With level funded plans, regular reporting allows you to see where your premium dollars are being spent and where claims are being paid.

If you notice a lot of your employees are utilizing the ER instead of visiting an Urgent Care facility or Primary Care Physician, hold a quick meeting on how much more cost efficient quick care facilities are. Many of these level funded plans include telemedicine visits which won't count against your claims, improving your likelihood of a reimbursement at the end of the year.

ACA Compliant

No need to worry—Level Funded Plans meet all the requirements of the Affordable Care Act. 

Because these plans are self-insured, they aren’t required to cover all the state mandated benefits required by fully insured plans, such as infertility treatments and bariatric services. These are often the most underutilized benefits, but due to their cost can directly impact premium costs. By removing these from the plan structure—insurance carriers can charge less and remain complaint.  

Since these plans are ACA compliant, every plan still includes free preventive services. 

Hybrid Between Fully Insured and Self-Insured Plans

Fully Insured

A health insurance plan set up so your business pays your employee’s premiums at a fixed rate based on the number of enrollees in the plan.

The insurance carrier determines the fixed rate based on their risk assessment of insuring your employees.

When your employees start to have health issues and need to use their plans more, you can expect a noticeable increase in your fixed rate when your plan renews. On the other hand, if your employees rarely use their plan you’re still paying a fixed rate…

Overall this option decreases the risk of fluctuating monthly cost but doesn’t give any incentive for having healthy employees.

Self-Insured

You assume the financial responsibility of health insurance benefits for your employees in a self-insured plan. Basically, your business manages the risk and pays the claims instead of the insurance carrier.

Many small businesses are unable to review and process claims in house so they will contract with a third-party administrator (TPA) to provide administrative services for the plan.

Level Funded Hybrid

These plans are technically self-insured, but they feel like they are fully insured. After medical underwriting your premiums are fixed like a fully insured plan. However, in the event of a good claims year, you can receive a return of premium just like a self-insured plan. 

Rates Aren’t Age Based

Today small businesses are subject to the ACAs community rating rules.  In many states “small” is defined as businesses with 50 Average Total Number of Employees (ATNE) employees or less in the previous calendar year.  

ACA rates are based on age instead of pre-existing conditions. And while some groups with older demographics may see lower premiums with these rules—most suffer significant rate increases each year.

In 2017, ACA groups are averaging about a 15% rate increase.

That’s why level funded plans evaluate only your company’s employee risk pool so rates are based off your specific group's medical history (from the past 5 years). That means no more high-priced ACA community based rating. The results are often lower risk and lower cost plans.

And administratively for you, juggling a composite rate based on the group is easier than juggling every employees rate individually. 

How does level funding work?

You pay a fixed monthly premium based on estimated claims for the year. If your employees don’t meet their expected claim amount, the unused funds go back in your pocket. If your employees do exceed the claim amount, you continue to pay the same fixed monthly premium amount thanks to stop loss insurance. 

What is Stop Loss Insurance?

It protects you against catastrophic or unpredictable losses.

Stop loss insurance is built into your level funded plan so you never pay more than your set premium amount when claims exceed expectations.  And when claims are lower than expected, your business can receive a refund on unused funds at the end of the year.

With stop loss—the insurance company is responsible for eligible losses that exceed certain limits, not you.

Here’s how Dan saved 33% by switching to a level funded plan for his business:

Dan is a small business employer with 19 employees.  The average age is 32 years old and nearly half have families/dependents.

Dan offers one plan option with a $1,500 deductible.  His fully insured, community rated premium was roughly $13,500/month. After receiving a 15% increase (now $15,525/month), Dan decided to give level-funding a shot.  After underwriting his specific group for a level funded plan his premium, he received a quote that costs $10,150/month ($5,374 cheaper a month) And because he chose Aetna his employees got a $25 Apple watch as a health incentive.




    appleinsider.com  

The best part of it all, he could continue offering low deductible plans with a large PPO network while saving himself (and his employees) money on health insurance premiums.  

How does underwriting work?

Your employees answer simple health questions like what you answer when you visit a new doctor.                                                                                                                                                     

These questionaries may take 5-10 minutes to answer and help the insurance carrier determine how much your plan’s going to cost.                                                                                                

Based off how Dan’s employees answered their health questionnaires, Dan locked in a rate for a level funded plan that’s almost identical to the fully insured alternative equating to a savings of $5,374/month or 33 percent/year.

Take the first step to see if your business qualifies.  

No cost. No commitment.

Worst case scenario, your business doesn’t qualify or the underwritten rates are higher or you don’t earn premium back—you can always stay with your fully insured plan.  

Insurance Carriers with Level Funded Plans:

  • All Savers Plan with United HealthCare
  • Aetna Funding Advantage

 

 

Qualified employers who try this option will save money—it’s just a matter of how much.   We have yet to see a company who qualified for a level funded plan and didn’t save money.  

How do you know if your group qualifies for a level funded plan option?

Qualifications based on two factors—medical history and size.

  1.   Larger groups (greater than 50 employees) can be denied by the insurance carrier based on medical history. If you have someone on staff who is suffering from a critical illness such as renal failure for example—they will drive up everyone       else’s rates.  Carriers can rate up to an 80% increase on fully insured plans. With level funded plans carriers are essentially cherry picking the healthy groups. Insurance carriers would never rate you higher than your fully insured plan—they     just won’t insure you if they think you’re a high-risk group.
  2.   Insurance carriers will cover groups with as few as five enrolled employees

Summary:

Level Funding is real health insurance. It includes preventative care services and is 100 percent complaint with the current rules and regulations. 

The difference? You finally get to see where your money is going.

No more blindly paying health insurance premiums and crossing your fingers.

Convinced that level funding is the option for you?

Call us now—our benefits specialists are waiting to help you get started (855) 563-6993 

 

Contact Us