Tag Archive for: fully insured

Understanding Your Employee Health Benefits is More Important Than Ever Before

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Employees that lost their job at the start of the pandemic and those that left to care for children or elderly family members have begun searching for new employment. One of the top factors that employees consider when deciding on a job is the type of benefits offered. While retirement benefits remain high on the list of requirements, health insurance tops the list. The better the health insurance benefits, the more likely the company can entice top talent. This is especially true now, as COVID-19 continues to spread throughout much of the country. In fact, many employees will take less pay when returning to work if the health benefits are good.

While it’s more important than ever for companies to offer health benefits to employees, employers need to take a close look at the benefit plan they offer. During these uncertain economic times, employers need to be extremely careful to control spending. Employers currently offering a fully insured plan might want to consider other options. While fully insured plans provide an excellent choice for many organizations, self-insured health plans offer more flexibility, greater cost savings, and visibility into healthcare spending.

Fully-Insured Health Plans

With a fully-insured health plan, employers pay a premium each month to the insurance carrier. Rates are fixed each month based on the number of employees enrolled. The insurance carrier pays healthcare costs as outlined in the policy purchased by the organization. The employee pays all co-pays and deductibles. This is the most familiar type of employer-sponsored health plan.

Self-Funded Health Plans

Employers run their own self-insured or self-funded plan. They do not purchase their health plan from an insurance carrier. Depending on the needs and budget of the organization, the employer determines the fixed and variable costs for the plan in advance. Fixed costs include all administrative fees. Variable costs include health care claim costs, which can vary from month to month. While self-funded plans offer flexibility and lower costs, they carry risk as well. If an employee or their dependents require extensive treatment or care, the employer pays for these expenses.

Reducing Risk

Employers that wish to reduce risk can take a level-funded approach to self-funding. With a level-funded approach, the employer estimates the total amount of money spent on healthcare claims each month. They then purchase stop-loss insurance. When healthcare claims exceed the estimated amount, the stop-loss insurance covers the difference.

Deciding On A Health Plan

When deciding on the type of health plan to offer, employers need to look at several different factors. The type of industry and size of the organization can impact health plan requirements. It’s recommended that employers speak with an employee benefits expert for advice.

MEBO offers self-funded, level-funded, and fully-insured health plans to organizations of all shapes and sizes. Please contact us for information about our services.

Choosing the Right Health Plan for Your Employees

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Many employers find it difficult to locate quality staff. Offering a good benefits package is an excellent way to attract top talent. While it isn’t necessary for most small businesses, offering an employee health plan increases employee satisfaction and improves employee retention rate.

ACA Rules Regarding Employee Benefits in California

Under current ACA rules, companies in California with fifty or more full-time equivalent employees (FTEs) must offer ACA-compliant healthcare coverage. Organizations that do not comply with this law could face a penalty of $2,570 per eligible full-time employee.

Part-time employees that work less than 30 hours per week are not entitled to health benefits under this law. However, organizations with several part-time employees may still need to provide health benefits to full-time staff members. Two part-time employees that each work an average of 15 hours per week is equal to one full-time equivalent employee.

Even though organizations with less than 50 full-time equivalent employees do not need to offer health coverage to comply with ACA rules, doing so provides numerous benefits. Employers that offer health benefits can deduct all premiums paid throughout the year. In addition to impressive tax write-offs, offering health benefits increases employee satisfaction, attracts quality candidates, and boosts productivity. When employees receive regular and preventative healthcare, they’re less likely to call out sick and experience major health problems in the future.

Fully Insured VS. Self-Funded Health Plans

When deciding on the type of employee benefits to offer, employers can choose between a fully insured health plan or a self-funded health plan. While a fully insured health plan costs the same each month, self-funding allows organizations to pay for only what they use.

Level funding is the most popular form of self-funding.  Taking a level-funded approach provides organizations with control over the frequency and severity of claims. This increases predictability and keeps costs low.  A level-funded health plan provides the same cost-savings and flexibility as a self-funded health plan, with the predictability and financial security of a fully insured health plan.  By purchasing stop loss insurance, organizations in a self-funded arrangement limit their exposure to risk. Stop loss insurance protects the organization from large or excessive claims. This reduces financial risk, increases control over spending, and provides peace of mind. With stop loss insurance, the employer knows there is a limit on what they could potentially spend each year.

Perhaps the greatest benefit of self-funding is the transparency it provides. Self-funding allows employers to see where the largest claims are coming from. They can then use supply chain management strategies to control costs, while improving health outcomes for their employees. Self-funding offers increased flexibility over fully insured plans, as employers can adjust their plan and approach to meet the changing needs of their organization.

Employers considering self-funding often worry about ACA compliance. Self-funded or self-insured plans are not subject to state insurance laws and are exempt from certain ACA rules. In order to ensure ACA compliance, employers need to file the ACA’s 1094-B and 1095-B series with their taxes.

Employee Health Plans

Although self-funded plans used to be reserved for California organizations with 100 employees or more, new strategies allow smaller companies to take advantage of the cost-savings, transparency, and control that self-funding offers. However, it’s important that leaders fully analyze their needs when deciding on the type of health plan to offer. Employers should consider speaking with an experienced employee benefit specialist for advice.

Located in Orange County, California, MEBO develops customized employee benefit plans that meet the unique needs and goals of our clients. We work directly with each of our clients throughout the entire process, helping them mitigate risk and keep costs low.

Please contact us for more information about our services.