Is Level Funding Right for your Company?

Is your company considering moving from fully-insured health plans to self-funding? Level funding can be a good transitional step. It provides the consistent, predictable monthly expenditures of a fully-insured plan, but with the flexibility and lower regulatory obligations of self-funding.?

Level funding is a type of self-funded plan where employer contributions are made on a monthly basis. The employer pays a carrier a set amount each month, which helps with budgeting and financial planning. The monthly fee covers estimated costs for expected claims, administrative costs, and stop-loss insurance, which caps the total annual losses for self-funded plans.?

Unlike self-funded plans, the cost of a level-funded plan is consistent from month to month, creating more stability in financial planning for the year. At the end of the plan year, carriers make adjustments based on whether the total claims costs are higher or lower than what was projected for the year. For lower costs, the adjustment may come in the form of a refund. (If actual claims are higher than expected, there may be a premium increase on the stop-loss insurance renewal.) Like self-funded plans, level-funded plans are not subject to all of the requirements of the ACA and may be exempt from some state-level insurance requirements.?

If you are looking to move from fully-insured health plans to self-funding, level-funding can be a good transitional step. It provides the consistent, predictable monthly expenditures of a fully-insured plan, but with the flexibility and lower regulatory obligations of self-funding. However, it's important to note that level funding may not be the best option for every company. It's important to consider the size of your company, your employees' healthcare needs, and your budget before making a decision.?

If you're unsure whether level funding is right for your company, consider consulting with a healthcare benefits expert. They can help you evaluate your options and make an informed decision.