Tag Archive for: self-insured

Retain Your Savings with Level Funding

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Integrating a new health plan strategy can reduce the amount of capital a business spends on overall health claims costs. With the high cost of healthcare in Southern California, most organizations agree that any cost-savings is worthwhile. However, many employers find they lose half of these savings to the company managing their health plan. At MEBO, we strive to help employers retain their savings and achieve the greatest benefits from their employee health plan.

By taking a Level-Funded approach to self-funding, organizations get the predictability of a fully-insured health plan and the cost-savings and flexibility of self-funding. Unlike a fully insured plan, employers retain 100% of their savings when claims are lower than expected.

Enjoy Increased Flexibility, Transparency, and Predictability

When selecting an employee health plan, many organizations opt for a Level Funded approach because of the predictability, visibility, and financial protection it offers. Monthly costs of a Level Funded plan include stop-loss insurance premiums, administrative fees, and estimated claims expenses.

With Level Funding, monthly costs are established in advance and employers pay a fixed or “level” amount each month. Employers also receive ongoing claims data. This valuable data makes it possible for employers to see exactly where and how their healthcare dollars get spent.

At the end of each year, if an employer’s estimated health care payments total more than the actual claim costs, the employer receives a refund for the difference.  Alternately, if claim costs exceed the estimated limit, stop-loss insurance covers the additional expense. Level Funding offers transparency and flexibility. Stop-loss insurance limits risk and caps financial exposure.

Flexible Approach

Level Funding is a type of self-funding. This allows employers to tailor the plan to meet the changing needs of their organization. Based on claims reports, employers can quickly locate areas that impact claim costs. They can then adjust their plan as needed. Based on health claim data, employers can also choose to implement strategies like employee education on wellness and preventative care.

Is Level Funding Right for Your Organization?

While Level Funding offers numerous benefits, it might not be the best fit for every business. It’s important that leaders fully analyze their needs and determine how their company will allocate the cost savings.

MEBO has worked with numerous employers to help them locate ways to reduce costs, increase transparency, decrease the frequency and severity of claims, and improve health outcomes for employees. Please contact us for more information about Level Funding, Self-Funding, and Fully Insured health plans. We look forward to hearing from you!

 

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.