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One of the top concerns for small businesses, and small business owners, is the cost of providing health insurance and finding an Indiana Health Insurance Agency that they can rely on. Under the Affordable Care Act, small groups have seen rates almost double. The insurance industry’s answer to reducing small Indiana Group Health Insurance costs is the introduction of level funding. Level-funding is also known as partially self-funded, alternate funding, fully funded, & self-funded. This kind of insurance is ideal for start-up companies or small to medium-sized businesses.
A level-funded health plan is not a plan that is fully insured. A level-funded health plan is a hybrid plan of self-funding and fully insured plans. The risk of using these plans is shared by both the employer and the insurance carrier that is protected by stop-loss insurance. Stop-loss insurance is a type of insurance that protects the insurer from large claims.
The current level-funded market for a small group is an exciting one. Each insurance group has a unique rate, but our average savings vs. fully insured rates are 31%. Not all groups are eligible for a level-funded plan, and we do pre-screen/field underwrite cases to determine if level funding is an actual option. All small groups with a group health plan should entertain the idea of level funding working for them.
The self-funded medical plan pays for all covered medical expenses that members incur.
A third-party administrator (TPA) will administer all customer service, claims processing, eligibility, and additional admin services. The TPA can be the insurance company, or it could be an outside entity.
There will be a stop-loss insurance policy that protects the plan from large or catastrophic claims by either a covered individual or the entire group. The stop-loss policy can be provided by the insurance company offering the plan, or it can be from a separate insurance company. This really depends on where the self-funded plan is coming from. Large insurance companies will provide everything in-house whereas smaller companies will piece the policies together.
With level funding, the group will have to go through underwriting to finalize the rates. The group that has low risk could see a substantial saving vs. fully insured.
On a level-funded plan, the company will make the premium payment each month very similar to a fully insured premium. The difference is that the group will see the breakdown of fixed costs and claims funding. Under this arrangement, if medical claims are higher than expected the group is still only responsible for the premium. If the group has lower-than-expected claims throughout the year, they could receive a credit back from the claims fund — the group shares in the savings on a good year.
With level funding plans being considered self-funded they are not subject to most state mandates, or some insurance premium taxes, which can produce savings.
The level-funded plan can produce upfront savings in the form of reduced premiums and additional savings if the company has a good claims year. Multiple insurance companies are offering level-funded health plans, but the most important decision when choosing the right insurance agency is going with someone you trust. There are large health insurance companies that now offer these plans, and there are also a lot of small companies whose names are not recognized. With medical underwriting, each company has a different tolerance to risk. One company may not take a risk, whereas another views the risk as acceptable. The health insurance industry has gone through a massive amount of mergers and acquisitions, and this has led to a lack of competition, especially in the small group market. With the introduction of level funding insurance, there is now some level of competition in the medical insurance market, and we enjoy brokering the different carriers to deliver our clients the best plan possible.
For clients eligible for level-funded insurance plans, there are a lot of great benefits when you go with this plan. Business owners have the flexibility to control their medical costs, have a predictable monthly plan, and have full transparency over what their monthly bills are being paid for. This plan is also a great model for businesses that are looking for an affordable option with their health care and still want to give their employees quality health benefits.
Though Nefouse & Associates is a part of the smaller insurance agency groups, we offer level-funded options that are tailored to our clients. Nefouse & Associates are the top insurance brokers in the state of Indiana and strive to give our clients the best health insurance possible. We have over 30 years of experience in the industry and our clients love working with us. Finding the right Indiana Health Insurance Agency for you and your company can be stressful. Eliminate the stress and let us handle that for you. Contact Nefouse & Associates today to see what we can do for you.
