Fully Insured Plans
Employers with 2 employees or more can qualify for a group plan. These plans can be written as fully insured group plans with 4 top carriers: Carefirst, United Healthcare, Cigna and Aetna. These types of plans offer a variety of options. Fully insured plans place the risk solely on the insurance carrier. These plans also work well with supplemental coverages to limit employee's exposure to large out of pocket expenses that would otherwise be applied to deductibles and Co-insurance.
Level Funded Plans Level funding is starting to become more and more popular with employers due to the ever-rising cost of the traditional fully insured plans.
Level funded plans are self-funded plans that act like fully insured plans. Just like a self-funded plan you buy a stop-loss insurance and any claims that come up during the year go toward the stop-loss. With a level funded plan if your claims go over the stop-loss the carrier picks up the cost of any claims past the stop loss. This means that your monthly premium will not change throughout the year. These plans will become more and more popular over the next few years. Employers are looking for more ways to control the cost of health insurance for their employees. That's even more true now with the added financial stress that the Corona Virus has added.
Self Funded Plans
Self-funding is a leading option for companies who are struggling with the rising costs of healthcare. Studies have shown that self-funding can cost as much as 40% less than comparable coverage via insurance companies. In self-funding health plans the employer takes on the financial risk of the plan. The company pays out of pocket for their employees healthcare expenses as they occur. This differs from the fully insured plans where the employer in a fully insured plan pays the pre-determined premium and the insurance company takes care of paying all the medical expenses. With a self-funded health plan there are two main costs that need to be considered: fixed costs and variable costs.
Fixed costs include administrative fees, stop-loss premiums and any other set fees charged per employee. These costs are billed monthly by the TPA or carrier, and are charged based on plan enrollment. This is also known as a per employee per month (PEPM) fee.
Variable costs include payment of health care claims incurred. These costs may vary from month to month based on health care use by the covered persons.
To limit risk, some employers use stop-loss insurance which covers the claims that exceed the stop-loss amount. These are usually high claims over 50k plus. There are several stop-loss carriers to choose from.
Reference-based Pricing
Reference based pricing is a self-insured health plan design strategy that caps what the plan will pay providers for a covered service. This cap, also known as an allowable amount, is based on chosen metric or reference point.
RBP plans often set their reference point as Medicare reimbursement rate,
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