Understanding Level-Funded Healthcare Plan Options for Small Businesses
When navigating the complex world of healthcare benefits, employers often find themselves weighing different options, each with its own set of advantages and drawbacks. One lesser-known but increasingly popular choice is level-funded healthcare plans. This innovative option is a hybrid between fully-funded and self-funded plans, offering a unique balance of cost savings and risk management.
But despite its advantages, many benefit brokers tend not to present level-funded plans as an option, especially to smaller employers. So, what makes level-funded healthcare so valuable, and why is it critical to work with a broker that can guide you through these innovative options?
Why Many Benefit Brokers Don’t Present Level-Funded Plans
Level-funded plans can be an underutilized option for smaller employers, and this is often due to a combination of factors:
Perceived Complexity: These plans involve elements of both fully-funded and self-funded insurance. While they offer the predictability of a fixed monthly premium, they also include a potential year-end refund if claims are lower than expected. Brokers unfamiliar with these nuances may shy away from recommending them due to the perceived complexity.
Risk Aversion: Many brokers are risk-averse when advising smaller employers. Since level-funded plans introduce some level of claims-based risk (even though it’s capped), brokers may prefer to recommend more traditional, fully-funded options that are seen as safer, even if they offer less long-term value.
Lack of Awareness: In some cases, brokers may simply not be up to date with the latest level-funded offerings from insurance carriers. Without staying informed about newer products, they might not be able to provide the full range of options to their clients.
The Value of Level-Funded Plans
Despite these challenges, level-funded healthcare plans hold significant advantages for many businesses, especially when compared to traditional fully-funded or self-funded plans:
Cost Savings: Level-funded plans provide an opportunity for businesses to save money. With fully-funded plans, premiums are fixed, and any unspent funds go to the insurance carrier. In a level-funded plan, if claims come in lower than anticipated, the employer receives a refund or credit. This gives businesses a chance to recoup some of their healthcare spending.
Predictability with Flexibility: Unlike self-funded plans, where an employer might be on the hook for unexpectedly high claims, level-funded plans cap the employer’s liability. This allows businesses to budget with confidence, knowing their monthly payments won’t skyrocket unexpectedly.
Transparency and Control: With level-funded plans, employers often receive detailed reporting on their claims, which can help them better understand their healthcare costs and adjust benefits as needed. This transparency is rarely available in fully-funded plans.
Customization: Because level-funded plans are more flexible, businesses can often tailor their coverage to meet the specific needs of their workforce, something that’s more difficult with the one-size-fits-all approach of fully-funded insurance.
Why Partnering with an Innovative Benefit Broker is Critical
Choosing the right healthcare plan is one of the most important decisions a small or midsized business can make. But too often, employers aren’t presented with all of their options. This is where the expertise of a forward-thinking benefit broker becomes invaluable.
An innovative broker will:
Present All Viable Options: Instead of defaulting to the traditional, one-size-fits-all plans, a proactive broker will explore and present innovative options like level-funded plans that can better meet your business’s needs and save you money in the long run.
Stay Ahead of Industry Trends: The healthcare landscape is constantly evolving. Brokers who stay informed about the latest developments are better positioned to recommend cutting-edge solutions like level-funded plans, which are becoming more accessible to smaller businesses.
Focus on Long-Term Value: Rather than simply finding a plan that works for today, an innovative broker will look at the long-term value of your healthcare investment. They’ll help you structure your benefits in a way that not only saves money but also attracts and retains top talent, ensuring the growth and stability of your business.
Conclusion
For small and mid-sized employers, level-funded healthcare plans represent a powerful opportunity to reduce costs, maintain flexibility, and gain more control over healthcare spending. However, these plans are often overlooked, and that’s why it’s crucial to work with a benefit broker who is committed to finding the best, most innovative solutions for your business.
If you’re ready to explore your healthcare options, including level-funded plans, partnering with the right broker can make all the difference.