Agent Answers

Group Health Plan Design Flexibility + Lower Costs for Small Businesses With Level-Funded Insurance

Written on June 16th, 2021

Agents that work with small employer groups (usually 2-50 employees depending on the state) face a unique set of challenges when it comes to finding comprehensive health insurance coverage that is affordable for both the employees and employer.

That’s because small group insurance is subject to state and federal regulation that sets prices and plan designs in much the same way as the individual ACA market, by location of the business, number of people on the plan, age, and in some cases tobacco use.[1]

Large group insurance, while still regulated by provisions of the ACA, has more latitude to determine rates and more plan design flexibility since it’s subject to fewer of the ACA’s benefit mandates.[2]

So how can you help your small group employers access affordable and valuable benefits for their employees? One way is by leveraging level-funded health plans.

Do you have a small group client who’s finding it difficult to obtain affordable health benefits for their employees? Let us help!

Yes – Let’s Talk About My Group

Why Level-Funded Plans?

Level-funded health plans, also sometimes referred to as “partially self-funded plans” help fill the gap between self-funded and fully insured plans by combining the plan flexibility and cost-savings of self-funded plans with predictability and the financial protection of fully funded plans.

How?

The underwritten premium amount the employer pays for the policy is paid towards three main costs associated with the plan:

Who Are Level-Funded Plans Right For?

You may already have a group or two in mind for a level-funded plan option. They can be a good alternative to a fully-funded (or ACA) plan for smaller groups who want to avoid the risk associated with a self-funded plan.

The types of employers who may benefit from level-funded plans include those:

Comparing Self, Level, and Fully Funded Plans

Feature Fully Self-Funded Level-Funded Fully-Funded
Stop-Loss Coverage available?[3] No Yes NA
Who Assumes Risk for Claims?[4] 100% Employer Employer up to stop loss amount, then insurance company 100% Insurance company
Premium Cost[5] Lower Medium Higher
Claims Refund Available? NA Yes No
Plan Design Flexibility High Medium Low
Group Size Fit 1,000+ people 5-75 people 100+ people

Level-Funded Plans and the Affordable Care Act

Level-funded health plans are required to meet some of the ACA’s provisions but are not subject to the same regulation that would qualify them as “minimum essential coverage” health plans.

The following ACA provisions have to be adhered to by all self-insured plans, which include level-funded plans:[6]

The ACA protections that extend to individual and fully-insured small group plans but which are excluded for self-insured and level-funded plans are:[7]

Group Specialists – Helping Every Step of the Way

IBG Group Specialists support agents with all of their group business needs – from simple to complex – they have dealt with it all and are committed to providing the assistance you need.

IBG Group Specialists are:

Sell with confidence by partnering with an IBG Group Specialist today!

Get a Group Quote

Next Steps for Agents

Level-funded plans can be a valuable solution for employer groups who want to move away from fully insured health plans, but don’t want to take on the risk of a self-funded plan, and want more plan design flexibility.

If you have small group clients currently utilizing fully-funded ACA plans, it may be a good idea to quote them a level-funded plan and see if there are potential cost savings.

A group can be moved from an ACA plan to a level-funded plan anytime during the year without incurring a penalty.

Not sure how to get started? We can provide a level-funded quote even if you’re not yet contracted. Get the process started by requesting a quote and an IBG Group Specialist will reach out.

Quote Level-Funded Health Plans

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