For Small Business, Level Funded Health Plans Work!

Many small businesses (2 to 49 employees as defined by the Affordable Care Act) although not required by law to offer healthcare to their employees, still want to do so. Some may offer health care because they want to take care of their employees, while others may realize the value of it when it comes to recruiting and retaining employees.

Health insurance is still ranked high in importance when it comes to benefits and many job-seekers understand that the most reliable and cost-efficient way to obtain healthcare is through an employer.

Level funded health plans have recently been attracting more attention among smaller employers. Typically, level-funded plans include these 4 components: 

  • Administrative Costs — Costs that are fixed and charged per employee. They will remain the same regardless of claims. This is the cost employers pay for network availability, claims adjudication, and prescription network.

  • Individual Stop Loss Coverage — This is the stop loss insurance employers pay so they’re protected in the event that an individual claim is exceedingly high in a given plan year. If this individual claim reaches the stop loss deductible, the reinsurance kicks in and reimburses the employer for claims.

  • Aggregate Stop Loss Coverage — This type of stop loss insurance covers the entire workforce. This acts the same way a family deductible would for your employees. If together, your employees incur enough claims that they reach the aggregate stop loss deductible, the reinsurance kicks in and reimburses the employer for claims.

  • Claims — This is the variable portion of level funded health plans, but also where an employer can gain the most cost savings. As with a fully insured plan, the insurance carrier estimates what they think an employer’s group policy will charge for the year (including all four components) and then divides that number by the total number of employees. This number is each person’s total premium, before it gets divided between employer and employee. The difference with level funded health plans is that if the claims are lower than expected, the insurance company will refund all or part of the unused funds back to the employer.

How Hollis Companies Can Help

If your small business healthcare plan has become too expensive, but you don’t want to give up such a valuable benefit to your employees, consider level funded health plans. Level funded health plans provide the potential for cost savings, while protecting you from the risks associated with self-funding, making them a potentially great healthcare solution for your business. With over 30 years of Employee Benefits experience, Hollis Companies can help you find the right solution to fit the needs of your business in an efficient and affordable manner. Call us today at (504) 828-6400, email us at rrodrigue@hollisco.com or visit our website at www.holliscompanies.com


Ryan Rodrigue