If you’ve decided to offer benefits to your staff, one of your biggest concerns is likely finding a way to fund your group health insurance plan. Luckily, there are a number of options available to you. In this post, we’ll explore some of the most common ways to fund coverage, as well as some tips for keeping costs down. So whether you’re just starting out and looking for your first plan, or you’re looking to switch plans, read on for some useful information.
Fully-Insured Plans
According to HealthInsurance.org, the majority of small group health insurance plans are fully-insured. Fully-insured plans are the risk-free option for employers as the insurance company assumes covering healthcare costs of your employees. Employers are charged an annual premium for benefits which is partially paid for by the employees themselves.
A variety of factors go into calculating these group health insurance premiums like number of members, average age of the group, employer claim history and the level of coverage, to name a few. The good news is that regardless of claims made during the year, you’ll pay the same set rate.
Self-Funded Plans
Self-funded plans put the burden of covering employees’ health costs on the employer instead of the insurance company. They can offer more affordable rates and more control over plans, but employers risk the chance of covering expensive, catastrophic claims.
With this funding plan type, employers pay claims as they’re incurred. There will be no limit to annual claims liability so if you’re comfortable assuming that responsibility this could be a great way to pay less in monthly fees and save if your claims are lower than expected.
If you’re weary about assuming that much risk, you could invest in a stop-loss insurance policy. Stop-loss coverage caps what you pay toward employees’ medical expenses at an agreed amount. Any services over that threshold are typically covered by the policy. By purchasing this coverage along with your plan, it can limit your financial liability.
Level-Funded Plans
Unlike traditionally-funded plans, level-funded plans are based on a predictable, fixed monthly rate regardless of actual claims. Level-funded plans are typically up to 30% less expensive and can earn employers potential savings in the form of a surplus when claims are lower than expected. They represent an excellent option in the case where a company has relatively young and healthy employees.
Minimum Premium Plans
This plan type is partly insured by the employer, but fully administered by the insurance carrier. The employer pays all employee claims up to an agreed amount, like a self-funded plan, but financial liability is limited to a maximum dollar amount by month and by year. After that agreed amount is reached, the insurance carrier pays the rest.
With minimum premium, it’s like a self-funded plan because you pay all incurred
claims expenses. But, like fully-insured plans, your financial liability is limited.
Conclusion
Taking care of your team with a robust benefits package is a crucial part of running a successful business. With the right group health insurance plan funding strategy, you can cover your employees without breaking the bank.
We hope this article has clarified some of the options available to you, as well as steps you can take to keep costs down. Of course, it always helps to have professional advice when navigating group health insurance plans for businesses – so don’t be afraid to contact our experts if you have any questions or concerns.
Call (877) 658-2374 to speak with an agent or enter your zip code to find out more about how you can make sure you and your team are well taken care of. Thanks for reading and best of luck on your journey towards providing the perfect benefits package!