Employer Funding Alternatives
At Towne Benefits, we provide multiple funding options for employer-sponsored health plans. Our team of Benefits Consultants can help you decide which funding option is best for your company's unique needs.
With a fully insured health plan, the employer pays a premium, typically fixed for a year, to the insurance carrier. The insurance carrier collects the premiums and pays claims based on the coverage benefits outlined in the policy purchased. The covered members (employers and dependents) are responsible for paying any deductible amounts or co-payments required for services.
Advantages of a fully insured plan include:
- Protection from costly medical claims
- Predictable and consistent coverage and premiums
- Simplicity of management
An employer has a self-funded (or self-insured) group health plan if it assumes the financial risk associated with providing health care benefits to its employees. Rather than paying fixed premiums to an insurance company—which, in turn, assumes the financial risk, the employer pays for medical claims out of pocket as they are incurred.
Advantages of a self-funded plan include:
- Improved cash flow
- Not subject to state health insurance regulations or benefits mandates
- Specific networks to meet the needs of your employees
With level funding, employers pay a set monthly amount to the insurance carrier, typically including administrative and other fees and the maximum amount of expected claims based on underwriting projections, as well as embedded stop-loss insurance.
The carrier facilitating the level funding will pay the employees’ claims throughout the year. At the end of the year, if payments exceed claims, the employer will receive a refund from the excess paid in monthly claim allotments. If the claims exceed what was paid into the program, in most cases, the stop-loss insurance will cover the overage amount.
Advantages of level funding include:
- Potential surplus at the end of the plan year
- Detailed reporting and utilization trends
- Fewer governmental regulations