A level funded health plan is a type of health insurance that combines features of both traditional insurance and self-insured plans. In a level funded health plan, the employer pays a fixed monthly premium, similar to a traditional insurance plan, but also sets aside funds to cover potential claims. This type of plan is becoming increasingly popular for small and mid-sized businesses looking for a cost-effective alternative to traditional insurance.
Here are some of the key benefits of a level funded health plan:
- Predictable Cost: With a level funded health plan, the employer knows exactly how much they will pay each month, which helps them budget for healthcare expenses and avoid the surprises that can come with traditional insurance.
- Lower Costs: Level funded health plans typically have lower costs than traditional insurance because the employer is taking on some of the financial risk for their employees’ healthcare expenses.
- Customizable Coverage: Level funded health plans are highly customizable so employers can choose the coverage that works best for their employees and their business. For example, they can choose specific medical procedures to be covered, set limits on maximum payouts, and more.
- Improved Cash Flow: With a level funded health plan, the employer has more control over their healthcare expenses, helping to improve cash flow and reduce financial stress.
- Access to Stop-Loss Insurance: With a level funded health plan, employers have the option to purchase stop-loss insurance to provide a safety net in case the cost of claims exceeds the funds set aside. This can provide peace of mind and help mitigate risk.
- Increased Control Over Health Benefits: Level funded health plans give employers more control over their health benefits, helping them tailor their plan to the specific needs of their employees. Employers can choose the providers and treatments their employees have access to, helping to control costs and ensure high-quality care.
- Increased Plan Flexibility: Level funded health plans are highly flexible, allowing employers to adjust their coverage as their needs change. For example, if the number of employees changes, or if the cost of healthcare increases, the employer can adjust their level funded plan accordingly.
Level funded health plans offer a cost-effective alternative to traditional insurance, with the added benefits of predictable costs, improved cash flow, and increased control over health benefits. Employers who are looking for a more flexible and customized approach to healthcare should consider a level funded health plan.
Not sure where to start with a level funded health plan? IBT Consulting will help you determine if a level funded plan is best for you and then work with you to set it up so it makes the most financial sense for your business.