As healthcare expenses soar, employers are seeking ways to lower costs and simplify the delivery of medical benefits to their employees. Our topic today explains an avenue employers can take to explore lower health plan costs without accepting higher risks. Level payment self-funded plans are that avenue.
We’re pleased to announce that our all-in-one digital HR platform now includes the full integration of Aetna Funding Advantage (AFA) level payment self-funded plans. As part of this rollout, we’re partnering with Aetna to offer businesses another option for insuring their employees.
Zenefits Broker Services helps businesses select the best plans for their specific needs. With level payment self-funded plans, employers still pay a fixed monthly premium just like a fully insured plan, but the premiums are used in a different fashion. Level funded premiums pay for administrative costs, claims, and an embedded stop loss policy aimed at limiting the financial exposure of the employer. Companies with good claims experience can lower their annual healthcare costs by as much as 25% or more.
Level payment self-funded plans combine the fixed premiums of fully insured plans and the financial advantages of self-insured plans. With level funding, businesses pay a pre-determined fee to a Third Party Administrator (TPA) that processes and pays claims and collects premiums. These plans have an individual and aggregate stop-loss insurance policy embedded, which protects employers if an individual or the entire group’s claims exceed a certain dollar amount. After the end of the year-long plan, a TPA will refund the company if claims came in lower than projected. If claims exceed the aggregate stop loss amount, then the company will be protected from this overage by the embedded stop loss policy.
The health plans are very similar to plan designs of fully insured plans with comparable deductibles, coinsurance, and copays. Each state determines the minimum number of employees required to get a stop loss policy issued and what amount the stop loss may be for each employee.
Level payment self-funded plans are emerging as a popular option because it provides the predictability of a fully insured plan, but companies only pay for the actual healthcare costs its employees incur.
Zenefits offers a variety of level funding options available from Aetna (platform integrated), CIGNA, Anthem CO, BCBS TX, UHC, as well as others.
Level payment self-funded plans provide businesses with a range of benefits, including:
Level payment self-funded plans are a great option for certain companies that want more flexibility and lower costs. In general, groups should be healthy and expect a low number of high-cost claims. These companies should be between 5-49 enrolled EE’s (in most states), and want to move away from the ACA community rating.
These plans may also by the right choice if a group wants to understand claims data and how it will impact the group’s rates. These groups should be open to a long-term (3-5 years) approach to containing costs. Finally, groups should be interested in the possibility of getting part of their costs back through a surplus.
Once a company chooses level payment self-funded plans, it will need an easy and fast way to integrate the new plans. Zenefits’ mobile-friendly flow streamlines this process, saving companies time – while providing employees with a quick enrollment process.
Our team of insurance experts can help you determine if level payment self-funded plans are right for your company and available in your state. Contact us to learn what your best options are for providing great employee health benefits.