PRE OBAMACARE RATES
Level-Funded Medical Plans
Level-funded medical plans are transforming the insurance landscape by providing employers with predictable monthly costs while offering much more comprehensive and less expensive coverage. This innovative approach not only helps businesses manage their healthcare expenses more effectively but also empowers them to invest in the well-being of their employees.
INCREDIBLE INSURANCE FOR THE RIGHT GROUP
What is Level-Funded Insurance?
Level-funded insurance is a hybrid health insurance model that combines features of traditional fully insured plans and self-funding. Employers pay a fixed monthly fee, which covers claims, administrative costs, and stop-loss insurance to protect against high claims. This predictable cost structure allows businesses to budget more effectively while still providing comprehensive health benefits. Additionally, any unused funds at the end of the plan year can be refunded to the employer, making it a cost-efficient option that incentivizes wellness and proactive healthcare management.
OBAMACARE
ACA Plans
The Affordable Care Act (Obamacare) was signed into law in 2010, eliminating underwriting for typical health insurance, which allowed everyone, regardless of pre-existing conditions, to access coverage and all approved prescription drugs. While this expanded access to healthcare, it also led to higher insurance rates as the risk pool now included a broader, more diverse population.
PRE OBAMACARE
Level-Funded Plans
Level-funded insurance is a hybrid plan where employers pay a fixed monthly amount to cover both administrative costs and expected claims, with the potential for a refund if claims are lower than anticipated. Participating in basic underwriting questionnaires can be beneficial as it allows insurers to better assess the group’s risk, potentially unlocking more comprehensive coverage and lower rates.
MAXIMIZE YOUR END-OF-YEAR REFUND
Understanding Your Claims Fund
Level-funded medical plans include a claims fund -- which is a pooled financial reserve contributed by both the employer and employees, designated specifically for covering healthcare claims throughout the year. This fund enables employers to manage healthcare costs with greater predictability, while still enjoying some of the advantages of self-funding. To safeguard against unexpectedly high claims, stop-loss insurance is built into the plan, ensuring the employer's financial stability remains protected.
Fund Purpose
The employer and employee contributions are pooled into a claims fund, which is used to pay for covered medical expenses throughout the year. When a claim is submitted, the plan administrator processes it and pays the healthcare provider directly from this fund.
Contributions
The employer contributes a fixed monthly amount to the claims fund, covering anticipated healthcare costs, administrative fees, and stop-loss insurance. Employees also contribute through fixed premiums, which help support the claims fund and ensure predictable coverage for their medical expenses.
Stop-Loss Insurance
Stop-loss insurance covers claims that exceed a predetermined threshold, ensuring that individual high-cost claims don't drain the claims fund. It also includes aggregate stop-loss coverage, which which caps the employer’s financial risk if total claims for the group surpass expected levels.
EOY Reconciliation
At the end of the year, the claims fund undergoes reconciliation to compare the total claims paid against the contributions made. If there is a surplus, it will be refunded. If claims exceed the fund, stop-loss insurance covers the difference.
REIMAGINING EMPLOYEE BENEFITS WITH AG INSURANCE
Why Some Companies Have Avoided Level-Funded Plans
Level-funded medical plans, while offering potential savings, can experience some variability in claims. If claims exceed the monthly payments the employer might not receive a refund at the end of the year. If claims remain elevated, there could also be a moderate rate increase at renewal, as the insurer adjusts to reflect the higher claims risk. While these fluctuations can occur, level-funded plans often still offer competitive pricing compared to fully insured options, especially for groups with a generally healthy workforce.
The GAP Solution
When paired with GAP insurance, level-funded medical plans become much more stable. GAP insurance is designed to cover most or all of an employee’s out-of-pocket expenses, including deductibles and co-pays, which drastically reduces the claims that hit the level-funded plan. Essentially, GAP insurance covers everything up to the plan's maximum out-of-pocket limit, so the level-funded plan is only responsible for claims exceeding that threshold. This setup dramatically lowers the volume and cost of claims that reach the level-funded plan, making it far more likely to run clean at year-end. With fewer claims affecting the level-funded plan, employers are more likely to receive a refund and avoid large premium increases at renewal, leading to a much more predictable and cost-effective health insurance option.
YOU WANT TO GO THROUGH UNDERWRITING
MYTH: The Underwriting Process Will Negatively Affect Our Group
Many companies have avoided level-funded health plans due to misconceptions about the health questionnaire process, believing it is intrusive, time-consuming, and will result in high premiums if employees have negative diagnoses. In reality, the questionnaire is streamlined and not invasive, typically focusing on general health trends rather than specific conditions. This process often leads to fairer premiums and potential cost savings, making level-funded plans a viable option for many businesses.
And just in case there is a group that has some health risk issues, we have contracts with some of the nation's most liberal carriers for underwriting and have had enormous success getting these companies approved.
What Underwriters Care About
Not all medical conditions negatively affect rates, as some conditions are considered low-risk and do not significantly impact the overall assessment of a group’s health.
Managed Conditions · Acute Conditions · Low-Cost Medications
Surgery - Resolved · High Blood Pressure · High Cholesterol · Lisinopril
Unfortunately, underwriters focus on certain medical conditions that will justify higher group rates because these perceived risks are more costly to insure.
Chronic Conditions · Auto-Immune Diseases · Specialty Rx
Auto-Immune Self Injectables · Diabetes T1 · Crohn’s · Humira · Skyrizi
