Level Funding Strategies
Level funding strategies are a variation of self-funding strategies that places very strong limits on your exposure. Level funding strategies have the potential to produce a great deal of savings if you have a good year regarding claims. Did you know that small and medium sized organizations can realize the same cost-savings from self-fundings that larger organizations are able to get?
If you are being pummeled by rising healthcare costs, level funding strategies are one of the tools that you can access to bend the cost curve for employee healthcare benefits.
Level funding features fixed monthly payments
Level funding features a fixed monthly invoice that represents 1/12 of the maximum cost of your exposure for the year. The payment includes your claims liability, stop loss, and administration. If your claims are lower than expected you will receive a refund at year’s end after a reconciliation. Generally these programs are offered either by national insurance companies or using their networks so your staff will really not know the difference from their prior plan.
Is your organization a good candidate for a level funding strategy?
Like other self-funded plans, under level funding strategies you don’t have to pay premiums based on community rates. If your employees, as a group, have lower risk than the wider community, then level funding enables you to pay only the actual claims and an administrative fee.
Financial benefits and lower compliance costs
A level funding strategy can help you better manage your budget and prepare for claims costs. You will enjoy smoother, predictable cash flow and avoid the worry that a high claim near the beginning of the year will impact your business. If you are already self-funded, then you will experience a more budget-friendly method of monthly claims payment, with stop-loss insurance to protect you from unexpected high costs.
Under level funding, there are fewer government regulations than fully insured plans. The result is that compliance is simpler and benefits administration is less costly.
Your next step
Reach out today for a free, no-obligation consultation. Learn if level funding strategies can help your organization, how much you can expect to shave from your costs, and what your path might be to implementation. Call now, or fill out the contact form to get started.
Want to learn more about self-funding options for small and medium organizations?