If you are a young and healthy group, a Level-Funded group health insurance policy may be just for you.
Level-Funded group health insurance policies are, in general, self-funded plans that have three elements: Stop- loss insurance, potential surplus refunds, and third-party claims administration (TPA.) The TPA is usually the insurance company offering the level-funded group plan.
Level-funded plans typically include monthly data reports that employers may use to track usage. With such data the employer can offer specific suggestions to employees, such as using an urgent care center as opposed to an emergency room, generic medication as opposed to brand-name, etc. The employer can let employees know about certain wellness programs available that offer cash incentives.
Predictability
Like a self-funded plan, the employer pays the employee medical claims. The employer pays a fixed premium each month. The premium reflects a pre-determined maximum claims liability, administration fees, and stop-loss coverage (protection from high usage and large claims.)
With self-funded plans the employer pays more if claims are high, and receives a refund if claims are low. With level-funded, if claims are high you pay the same premium, and get a refund if claims are low.
Surplus Refund
Level-funded group health insurance plans insure against high claims, yet offer a refund if claims are lower than expected. The incentive for the employer is to lower claims by encouraging participation in wellness programs, tele-medicine, generic drugs, etc., hopefully resulting in a larger refund.
Monthly Data Reports
For the small employer, having the ability each month to see overall usage, emergency room visits, pharmacy costs, and whether in-network or out of network providers are being used is a huge benefit when attempting to control costs. The employer no longer has to wait until the end of the year to see if their premium is going up or down. They can help to control costs each month by suggesting lower cost alternatives of care to the employees… using generics, tele-medicine, urgent care instead of emergency room.
Wellness Programs
All major insurers such as Blue Cross and Blue Shield of Arizona include wellness programs and 24/7 virtual care in all of their plans. There are fitness programs from many insurers that offer cash incentives to exercise each day. Around the clock virtual care increases employee satisfaction with the insurance plan.