Page 40 - Delaware Medical Journal - January/February 2021
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MSDIS CORNER
numberbythetotalnumberofemployees. This number equals each person’s total premium, before it is split between the employer and employee. The difference with level-funded health plans is that
if the claims are lower than originally expected, the insurance company will refund part or the full amount of the unused funds back to the employer.
4 Employers pay this stop-loss insurance to remain protected if an individual claim
is extremely high in a given plan year. If this individual claim hits the stop-loss deductible, the reinsurance reimburses the employer for the claims.
BENEFITS OF LEVEL-FUNDED PLANS
Level-funded plans deliver three primary
savings, more plan customization, and reduction in regulations.
• Fullyinsuredhealth plans remove most of the risks from the employer, making the cost of the plan much higher for the employee. In contrast, a self-insured plan places most of the
risk on the employer, but has the greatest chance for producing savings in the form of claims being lower than premiums for the employee. Therefore, level-funded health plans are the best of both worlds, making partial self-funding an easier and attainable option for a larger portion of employers, like small businesses. These plans save money for both the employee
• Level-fundedhealth plans provide employers with far more from some ACA regulations, such as the requirement to offer essential health three-to-oneratingformula.
• Level-fundedplans,even for small groups, do not have the same regulatory requirements as traditional, fully insured plans. This usually means that less administrative work is required from smaller companies who don’t have Therefore, level funding helps reduce overhead expenses.
WHAT ARE SOME POTENTIAL DRAWBACKS?
Some argue that the fact that level-funded plans do not stick to the ACA’s 80/20 rule is a potential drawback of this kind of plan. This rule deems that carriers must spend
at least 80% of collected premiums on medical care and/or attempts to improve the quality of care. In addition, if they do not follow the 80% rule, they must rebate any excess amount that was charged,
Due to self-funded and level-funded plans being exempt from this rule, carriers often
To protect against this practice, employers specialists who know to look out for these hidden costs, which can often be overlooked.
IS LEVEL FUNDING RIGHT FOR YOUR PRACTICE?
Almost all insurance that your practice purchases is an ongoing balancing
act between costs and risk, but each practice (especially a small one) needs
to determine how much it can take on without risking the livelihood of the company — and therefore, its employees.
If you’re considering switching to level funding, you need to ask yourself the following questions:
• Howmanyemployeesdowehave
today, and how many do we plan to have in the future?
• Howhealthyisourpoolof participants?
• Howmuchvariationinclaimscostcan we accommodate, year to year?
• we want to have (or need to have)?
• claims in such a way that they line their pockets at my expense?
If you have a small practice (in the two to
is made up of healthy individuals, and is represented by a talented and experienced you may be a suitable candidate for a level- funded health plan.
But if your workforce is on the larger side, made up of people with a lot of health it may not be a good solution for you.
The experts at MSDIS/USI can work with you to determine if your practice would MSDIS can investigate plans through all of the major players in the State, as well as being able to offer additional savings though certain carriers.
CONTRIBUTING AUTHOR
■ SHARON RUTH is a Senior Client Advocate who wastes no time when it comes to advocating for her clients and prospects. She coordinates all lines of Property and Casualty coverage for the Medical Society of Delaware Insurance Services, Inc. (MSDIS), specializing in Medical Malpractice. She will be happy to assist you with your insurance questions or concerns. Contact Sharon at 302-397-0173 or sharon.ruth@usi.com.
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Del Med J | January/February 2021 | Vol. 93 | No. 1
