Whether big or small, enrolling in employee health coverage for your staff is an important component of running your business. However, often times smaller companies have had a difficult time obtaining affordable coverage since the Affordable Care Act, or ACA, was initiated. While some small businesses have found ways to cover their employees, others still struggle to provide sufficient health plans.
Good news. There is a way around this problem for small businesses and even bigger companies. They’re called level funded health plans and they’re designed with the small business in mind. Especially those with fewer than 100 employees.
Level funded health plans allow for a company to fall back onto an ACA plan in certain circumstances, if necessary, in order to accommodate specific underwriting increases. This is a great advantage for small businesses.
With level funded health plans, employees have more control over their insurance plans and premiums. As an employer, you can assess the risks and potential costs associated with your staff and decide which plans will work best for your group. This allows you to make decisions based on the health of your staff and what you can afford. Additionally, with this type of plan, many health care reforms under the Affordable Care Act do not apply. For example, with the ACA, employers are required to hold essential health benefits coverage. With level funded health plans, you can decide what you will or won’t cover yourself.
These types of plans allow for employers to pay a monthly premium on their plans on an amount that has been set for the company. This is how it works: As the employer, you allot a set amount for your annual claims. This typically ranges from $10,000 to $20,000 to annually cover your employees’ health care costs. However, what if one of your employees becomes severely ill requiring special care? In this case, you have the option to revert back to a traditional ACA plan without risk or penalty. Bouncing back to a fully insured plan may save the company money in that you aren’t paying for extra coverage for that particular employee.
Exempt from ACA Mandates
As an employer, you might also find level funded health plans beneficial to your business for the tax exemptions from the ACA. There’s no Health Insurance Tax with this type of plan and you can also be exempt from some ACA and state mandated benefits requirements. Your insurance broker can help you find out which requirements your company can become exempt from with this type of plan.
Another benefit of a level funded health plans is the option to receive an annual refund for benefits not used. For example, at the end of each premium period, your company will assess potential claims surplus with your insurance provider. If there is money left over from your allotted amount, you’ll get a refund for the leftover funds. This is especially beneficial to small businesses with relatively healthy staff.
Stop Loss Coverage
Conversely, what if your staff isn’t so healthy? What if one of your employees becomes severely ill, using up all the coverage allotted for the company? Insurance companies have come up with a way to combat this potential issue. In the event that an employee becomes seriously hurt or ill, your small business can become exposed to hundreds of thousands of dollars in medical bills. But the stop-loss guarantee prevents you from losing your coverage. Instead, the insurance company will reimburse you for claims that exceed a certain level.
Affordable Benefit Levels
Because a level funded health plan isn’t subject to benefit design mandates required for other plans under the Affordable Care Act, it allows for more affordable benefit levels. This means that you have the option to choose your health insurance plan at a benefit that’s right for you, without paying additional premiums.
Plenty of Coverage Options
If you are considering a level funded health plan for your company, there are plenty of options to choose from. Major carriers like Aetna, Anthem Blue Cross and Blue Shield, Cigna and Humana are all providers that allow for level funded health plans.
Level Funded Health Plans
Level funded health plans are a great alternative to traditional health plans offered under the Affordable Care Act. This type of health plan can save small businesses upwards of 30% each year while providing good coverage for your employees.
Bottom line? It’s imperative to weigh all of your options when purchasing health care coverage for your employees. There are different considerations to keep in mind with all of them and your business depends on the right choice. Don’t waste your time and money with more exclusive health plans that are can be overwhelming and confusing.
Roper Insurance specializes in benefits solutions for all types of businesses – big and small. If you’re considering a level funded health plan for your business, we need to talk. Contact us today at 303.721.1145.