What are Level Funded Plans?

Level funding simply means that you’re dividing your premiums into a couple of different buckets. So you’re taking, let’s say, 60 percent of your health insurance premium and over to the left, you’re purchasing what we call stop-loss coverage. So you’re buying insurance for claims, over a specific dollar amount, like $20,000.

And then you’re also paying all the admin costs for the insurance carrier there. And you’re taking 40 percent of your dollars, your premium dollars, and you’re putting them over to the right into what we call a claim fund. And all the claims under, let’s say that 20,000 pooling point are going to be paid out of those dollars.

And if at the end of the year there’s any dollars left in that claim fund, you get to keep part of it. You get to get a refund part back and you, the insurance carrier takes some as well. It’s usually like a 50/50 split of any overage. So this has been a very popular option for a lot of employers over the last two or three years and for those smaller groups that are healthy, an opportunity to really save some money.

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