Choosing the right health plan for your employees is a critical decision that impacts both your workforce and your company’s financial well-being. Here, we break down the different types of plans—fully insured, self-insured, and level-funded—along with innovative solutions like self-funding and the Revolutionary 125 Cafeteria Plan to help you make an informed decision.
Fully Insured Plans
Fully insured plans guarantee acceptance for all employees, regardless of their health conditions. The insurance company assumes the financial risk, which leads to high costs even for plans with high deductibles. Employers often contribute to employee premiums, but adding family members to the plan, such as spouses or children, significantly increases costs. This option is best for businesses that prioritize simplicity and want a predictable cost structure, especially for groups with diverse health needs.
Self-Insured Plans
In a self-insured plan, the employer provides their own health coverage instead of purchasing a traditional plan. This structure allows greater control over plan design and potential cost savings. Employers bear the financial risk of healthcare costs incurred by employees, but stop-loss insurance protects against catastrophic claims by capping the employer’s liability. Self-insured plans are ideal for companies looking for customizable coverage and willing to take on some financial risk for potential savings.
Level Funding Plans
Level funding combines the benefits of fully insured and self-insured plans while mitigating risks. With level funding, employers pay fixed monthly premiums, which provide predictability. Stop-loss insurance protects against worst-case scenarios at both individual and group levels, and if claims are lower than expected, the employer receives a refund. This option offers the predictable costs of a fully insured plan while only paying for actual healthcare expenses incurred.
Fully funded plans can be expensive because insurance companies assume worst-case risks, but discounts are available for healthier employee groups. Level funding works well for employers looking to balance cost predictability with risk reduction.
Self-Funding with Stop-Loss Insurance
Self-funding allows employers to assume some risk for employee benefits, often leading to cost savings. Stop-loss insurance limits the employer’s liability by covering catastrophic claims. Claims are managed by a third-party administrator (TPA) who evaluates each claim for accuracy and efficiency. Excess loss coverage activates if claims exceed a preset deductible, providing additional security. Self-funding is a great fit for companies ready to take partial financial responsibility for employee healthcare costs while leveraging savings opportunities.
Revolutionary 125 Cafeteria Plan
This innovative plan increases employee paychecks and employer savings at zero net cost. Employees gain an average of $1,500 in additional annual take-home pay without any cost to the employer. Benefits are enhanced by eliminating co-pays, expanding prescription benefits, and providing unlimited telemedicine, including mental healthcare, all while maintaining existing health plans. Employers save $573.60 in taxes annually per enrolled employee, and the plan also reduces future healthcare costs. This plan is an excellent option for boosting employee satisfaction and employer savings simultaneously.
Finding the Right Fit for Your Business
Every business has unique needs when it comes to health coverage. Fully insured plans work well for companies prioritizing predictability and simplicity. Self-insured plans are ideal for businesses seeking customization and willing to accept some financial risk. Level-funded plans offer a middle ground with predictable costs and potential refunds. Self-funding with stop-loss insurance provides flexibility and financial safeguards. The 125 Cafeteria Plan enhances employee benefits while reducing costs for employers.
Choosing the right plan involves evaluating your company’s size, employee demographics, and risk tolerance. For expert guidance, consult a benefits advisor to determine the best option for your business and its workforce.
