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Level-Funded Insurance Plans

By April 16, 2021May 4th, 2021Employee Benefits

What Are Level-Funded Insurance Plans

Level-funded insurance plans or partially self-insured plans offer some of the money saving and customization of self-insured plans while keeping some of the financial security and predictability of fully funded plans. Although considered self-insurance plans, these plans have several differences from normal self-insurance plans.

In these plans, a company will make monthly payments to an insurance provider. If there are claims during the month the insurance provider will use the monthly payments to pay for the claims. Any money left over is then given back to the company after the insurance provider takes a set amount of the money to pay for administrative costs.

Benefits of Level-Funded Plans

Level-funded insurance plans can be a benefit for a company that wants to try self-insured plans but are unsure of how the unpredictability of claims can affect them financially. Level funded plans typically include stop loss insurance automatically. Stop-loss insurance kicks in if a businesses’ claims are over a certain amount. The amount is dictated by the insurance policy.

Just like other self-funded insurance plans, level funded options offer two primary benefits over a traditional insurance policy. If your claims are low, then you will experience a financial gain. The insurance carrier will refund the unused money. You will also save money by not having to pay a normal monthly premium.

The other main benefit of this type of plan is that you will have access to your companies claim data. This data can be helpful to find out how your employees utilize the benefits you are providing. You can better plan for what your employees need as well understand how to better educate them on the best way to use their health benefits.

Drawbacks of Level-Funded Plans

Of course, there are drawbacks to this type of plan. Self-insurance options, level funded or otherwise, will not be right for every company. As with all self-insurance options carriers restrict access to certain types of businesses with a minimum / maximum number of employees.

Self-insurance sounds like the perfect insurance option for your home business making Christmas cookies with Cousin Mel. However, a self-insured plan may be off the table for many home businesses. Often, there is a minimum / maximum number of employees restriction for level-funded plans.

On its face, level funded insurance plans seem like they are the perfect balance between a traditional insurance policy and a self-funded insurance policy. However, every business is unique. It is important to understand the nuances of your insurance policy. That is where an independent insurance agent can help.

Deciding What is Right for You

Our agents at Konen Insurance have knowledge and experience in a variety of industries. We search for answers to the questions that stand in the way of understanding your insurance. Our clients receive specialized advice that is actionable, and we work on their behalf to find the best coverage options available for them. Caring about our community and the businesses that drive it is a part of our mission. If you have insurance inquiries, please contact us and let us know how we can help.

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