Related Resources: Why Smaller and Mid-size Employers are Considering Self-funding
Hi, I’m John Milne, and welcome to this episode of BeneMINUTE.
It is no secret that health insurance costs are rising year after year with no end in sight. Many employers feel helpless and want to regain control of their benefits spend but don’t know how.
Employers now have more tools than ever to combat these growing rates through creative cost containment strategies along with alternate funding models. One of those alternative models is level-funding.
Level-funding is ideal for companies that like the idea of self-funding but want to keep the safety and stability of consistent premium payments. This set amount is made up of administrative and fixed costs, expected claims, and stop-loss insurance.
As claims occur throughout the year, they are paid by the carrier. At the end of the year if any claims dollars are left, the employer will receive a refund; but if the claims exceed the allotted amount then the stop-loss insurance initiates to pay the difference, not the employer.
In addition, the employer will now have access to detailed claims reporting highlighting where employees are both overspending and underspending on their health insurance. With this information employers can customize or eliminate plan attributes where employees are highly utilizing the plan.
Employers could also generate education and communication campaigns around these highly-utilized attributes impacting their spend such as urgent care usage vs. emergency rooms and generic drug usage vs. brand name.
I often recommend level-funding to organizations who are interested in self-insurance but also want to aviod the risk of unpredictable monthly costs.
Talk to your employee benefits broker or reach out to Corporate Synergies for guidance.
For more information on this and other topics, please visit our Knowledge Center at corpsyn.com. Thank you.