Level Funding Group Health Insurance
Is it right for your business?
There are basically two types and structures that insurance companies provide as “Group Health Insurance” to businesses and corporations.
The most common type is what we call “traditional” group health insurance. If paid in premiums per year are substantially more than the claims submitted to the insurance carrier, the insurance company has earned a profit on that business.
Conversely, in a level funded Group Health Plan, if paid premiums are more than submitted claims, the business and may be subject to a partial premium refund at the end of the contract year. This has been in many cases been a successful method to reduce overall premium costs, not only for the employer, but for the employees portion of the premium as well.
Additionally, if submitted claims are low, health insurance premiums for subsequent years may also be reduced.
The big benefit is that companies can self-insure without the risk of high unexpected claims as the insurance carrier provides a “stop loss” to protect the business.
Currently, companies that employ between 5 and 50 full time employees may benefit from this type of funding Arrangement as premium rates may average up to 25% lower than traditional funding arrangements.
Call us today to discuss if your business may qualify and determine what arrangement would be best suited for your company.