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What is a Level-Funded Plan?
Level-funding is a cost-effective health plan funding solution that allows companies to benefit from the predictable, fixed monthly rates of a fully insured plan, but only pay for health care that employees actually get.
Predictable costs, with the opportunity to get money back
Instead of monthly premiums, the company will be responsible for a specified level of claim liability. Each month, the company funds this maximum claim liability, thereby eliminating the normal volatility of self-funding. If a company’s claims are less than the amount they funded at the end of the policy year, they get 50 percent of the funding surplus.
Protection from high-cost claims, you never pay more than maximum funding
If claims go over the funded amount, the company is protected by stop-loss coverage. It limits the risk that the company is exposed to and protects from catastrophic claims. An advance funding feature allows the payment of claims even when the funding level is less than the claim payments. This feature ensures that the company never pays more than their maximum claim funding amount for any month of the year.