Small Business Insurance Options: Fully Insured Vs. Self-Insured Vs. Level Funding Plans


For those of you who haven’t heard, level funding is the next big thing in small business insurance options.  But how do you know if it’s right for your company?  And if you decide it’s a good solution, what is your next step?

Fully Insured Vs. Self-Insured Vs. Level Funding Plans

First, let’s start with a basic review of how most companies purchase insurance.  Traditionally there are two ways of doing things:

Fully Insured

A fully insured plan means that you are passing all of the risk onto your insurance carrier who charges you a flat monthly fee based on how they gauge the risk of insuring your employees.

If covered employees experience health issues and use the plan more, you will probably face a hefty increase in the monthly premium your business pays when your plan renews.  Conversely, if your employees rarely use the insurance, you’re stuck playing a flat monthly rate no matter what.  This model decreases the risk of month-to-month fluctuations but doesn’t provide any meaningful incentive for having healthy employees.


A self-insured plan is one in which the business pays the actual claims and essentially assumes the role of the insurance carrier in terms of managing risk. Many large companies offer at least one plan that is fully self-insured because they have a large pool of covered employees and also have the cash reserves to protect against a spike in claims volume or amount.

Historically, self-insurance has been perceived as far too risky in the small business market for a number of reasons.  Small businesses typically have less cash on hand and can’t weather a dramatic increase in costs as easily.  Also, claims data is very hard to come by in small business so it’s difficult to judge if self-insuring is worth the risk because you don’t even know the risk!  Most small businesses also lack the manpower in-house to actually review and process claims so they still pay an insurance company to act as a Third Party Administrator (TPA).  Though the business is paying the claim, the insurance company will actually process it accordance with the plan documents and ensure that all protocol is followed.

Level Funding

Today, level funding is emerging as a third option somewhere in between fully insured and self-insured.  Proponents of level funding argue that it offers the benefits of both insurance models with none of the risks.  So how does it work?

The “level” in level funding refers to the fact that you self-insure, but pay a level or steady fee each month as determined by your TPA.  Level-funded plans also come fully integrated with individual and aggregate stop-loss insurance.  Individual stop-loss insurance will kick in if a covered employee or dependent exceeds a certain dollar amount in claims.  Aggregate stop-loss will be activated above a certain dollar amount for all claims.  After you pay your level monthly fee for a year, your TPA will compare what you’ve paid with the actual claims and refund you any difference if you’ve paid more than you’ve spent.  In summary, you get the regular and predictable cost of a fully insured plan, but because you’re actually self-insured, you only end up paying for the healthcare costs actually incurred by your employees.

Benefits of Level-Funding for Small Business

Level-funding is becoming popular because plans following this model are not subject to several key regulations of the Affordable Care Act.  For example, they don’t have to offer a package of mandated benefits.  Because plans are self-insured, they can be written to the specifications of the business owner.  Also because level funded plans are technically self-insured, business owners also avoid paying the Health Insurance Tax (HIT) levied as part of the Affordable Care Act.  Furthermore, self-insuring your plan gives you more control and discretion as a business owner to approve claims outside of the contract.  If you have a tenured employee whose medical treatment would be denied under a fully insured plan, a level-funded approach would let you choose if you wanted to cover it anyway as a gesture of goodwill.

Level-funding is surely the wave of the future in the small business market.  If you think it might be a good strategy for your business, contact Benefit Administration Group for more information.  Many large insurance carriers are offering a level-funded option and your broker can help you choose a plan that’s right for you.  The Helios team are considered experts in this innovative new model and can help your business evaluate options and decide if level-funding can save your company money.


Find and share New Orleans area health care prices with PriceCheck tool

Originally published by | The Times-Picayune
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on April 05, 2017 at 5:40 AM, updated April 06, 2017 at 12:06 PM
Going to a doctor or a hospital in metro New Orleans is like shopping blind: most consumers never know the price in advance. By collecting information from you and others, we can help change that. | The Times-Picayune and WVUE Fox 8 News have partnered with ClearHealthCosts, a New York journalism startup, to set up the PriceCheck tool, listing hundreds of prices from health care providers in our region. Check it out, and use your insurer’s Explanation of Benefits, or EOB, form to add your prices. (Information on how to read your EOB form can be found here.)

This is part of our project “Cracking the Code: The real cost of health insurance.” Read our coverage here.

Affordable Care? 2017 Rates are Out Now!


Here is a personal look at the impact of the impact the Affordable Care Act has had on me and my family.  For reference, in the beginning of 2016, I was 45, my wife 42 and my kids 13, 10 and 5.  Unfortunately, we are all a year older going into 2017.

I am using Blue Cross of Louisiana’s most popular Gold-level plan for my unsubsidized premium comparison.  The plan has a $1,000 deductible ($3,000 for the family) and and out of pocket maximum of $5,000 going down to $4,800 in 2017 ($10,000 going down to $9,600 in 2017 for the family).

  • 2016 Premiums – $1,583.70 per month or $19,004.40 for the year
  • 2017 Premiums – $2,023.05 per month or $24,276.60 for the year

That is an increase of $439.35 per month or $5,272.20 for the year.  It also represents a 27% rate increase.  OUCH!!!

My wife and I both work (pretty hard, I might add).  To be fair, if our combined income was lower, we would qualify for some help with this premium.  You can check your own subsidy availability here.  At $113,000 in combined family income, we would qualify for $303/month in help.  At $114,000 or more, we do not qualify for any help.  I think this is what President Clinton referred to as “the craziest thing in the world.”

Some more broad trends of note:

  • the % increase on some “more affordable” plans (silver and bronze level) is as much as 44%
  • there are more “narrow network” plans this year – both in total number and more drastically in % of total plans available.
  • comparable small group plans are significantly better priced and offer significantly more coverage options.  See – The Small Business Health Insurance Roller Coaster – What is Next? – If you have a business or influence with your small employer, it may be time to run some numbers.

I hope our next President and Congress work together for a better solution for all of our sake. This is not sustainable.


Top 5 New Year’s Resolutions for HR!

The New Year is always a time for fresh starts and forward thinking resolutions.  Here are a few HR Resolutions for 2016:

5.  Eliminate/Reduce use of paper for things like employee notices and enrollment forms.  Compared to stone tablets, paper was a game-changer.  But, in today’s world, it is NOT the best means to deliver mandatory notices or request information from employees.  There is (and has been) a better way.  It is time to embrace it.

4.  Develop at least one HR Metric to track to measure success.  This is one of those goals that can meet you where you are.  If you currently do not track anything related to HR, maybe keeping an eye on something relatively easy to calculate like turnover or average length of service is a good start.  If you are already metric-rich as an organization, it’s time to roll up your sleeves and determine what result would most impact your organization.  Focus on your burning question and a metric can be built for you.

3.  Increase networking and learning opportunities.  HR people, by the nature of their profession, are generally good at networking (know lots of experts in various/related fields) and like to learn new things (which is a good thing given all that has been thrown at HR in the lats 3 years).  But, HR people who are not consistently networking with their peers and professional support network AND learning something new regularly CANNOT keep up with the pace of change in 2016 and beyond.  Networking is about personal connections and contacts.  Though LinkedIn and other social networking sites can accelerate the number of connections, they are not a substitute for personal interaction.

2.  Embrace new means of communicating with Millenials and Gen Z’ers.  This may be about WAY more than communication and is probably worthy of more than 1 resolution.  But, this is where you need to start.  From a recent article – “In 2020, Millennials (born between 1980 and 1994) will make up nearly half of the workforce and 20 million members of Generation Z (born between 1995 and 2010) will start their careers.”  That is a big deal and relying solely on traditional means of communication will not get your point across appropriately.  Mobile and web-native communication technology will be a must, and is certainly worthy of some focus from HR.

1.  Get your IT together.  With all of your new, post-ACA HR jobs – Compliance Management, Hours Tracking, Notifications, 1095 Reporting,. etc. – it is time to make friends with someone in your company (or a trusted outside resource) that can help you gather, configure, push and pull data from multiple systems.  This includes HRIS, Payroll, Time and Attendance, Recruiting, Insurance Carrier, Administrative Vendor, etc.  Though data is commonly shared between these parties, you are the one someone will come to when the data does not flow properly.  Automatically sharing data between third parties can be tricky and if something goes wrong, they always point at the other one – while you still have an issue to solve.

Next Generation Benefits Administration

The world of small employer benefits has changed.  Isn’t it time you made some changes too?

Reduce the stress of paper-based Benefits Enrollment and disconnected systems for ongoing Benefits Management.

We provide the tools to manage everything online and the people to support it.  Say goodbye to paper and hello to an easier way.

  • Web-based customized employer benefits portal for single point entry
  • Open Enrollment Management with confirmation statements and automated reminders
  • Full Suite of reporting capabilities
  • Year Round payroll deduction assistance
  • Full workflow processing services (managing employee salary changes, job changes, age changes, etc.)
  • Carrier File processing
  • For small and mid-sized employers
  • Billing and payroll reconciliation
  • Life event management
  • New Hire processing
  • Evidence of Insurability management
  • Ability to self-enroll voluntary and worksite products

Easy Implementation

We build your site to include all your unique eligibility and business rules.  This promotes accurate enrollment and eligibility tracking, as well as enabling HR to quickly access all data at any time.

Everyone Benefits

The online system reduces paper work and enrollment errors.  Moreover, employees no longer have to fill out multiple forms such as, Medical, dental, flex benefits, etc. One electronic form takes care of it all.

Introduce Your Employees to the Health Marketplace


As healthcare reform continues to loom large on the horizon, many owners of small and medium-sized businesses are OfficeBuilding-healthreform.comwondering how the changes will affect them on January 1, 2014. Designed to improve national access to healthcare coverage and medical treatment, the Affordable Care Act will allow Americans to obtain insurance through a new Health Insurance Marketplace. This Marketplace will be a comprehensive resource for “one-stop shopping.” Individuals and employees of small and medium-sized businesses will be able to compare options between private health insurance companies.

Along with this healthcare reform, the Department of Labor has recently issued an employer mandate to help clear up confusion and promote communication with employees. Many Americans are unfamiliar with how the Affordable Care Act will affect them directly or influence their ability to seek medical treatment. The Department of Labor has instructed that all corporations must provide their employees with a written notice that outlines details of how the healthcare reform will affect them. This can include, but is not limited to, informing the employee about the Marketplace, identifying employees that are eligible for premium tax credits, and acknowledging situations in which the employee loses employer contribution coverage to their health benefits plan.

Employer penalties will be enforced for owners of small and medium-sized businesses that fail to take appropriate notification steps regarding the Department of Labor mandate. Originally scheduled to roll out on March 1, 2013, the Department of Labor has changed the deadline with the hopes that employees will receive the information during later summer and fall months when it is due to influence them the most. This new timetable coincides with the open enrollment period for the Marketplace that begins October 1, 2013.

Small and medium-sized businesses that are affected by the employer mandate include those that employ more than one individual and are engaged in interstate commerce, the production goods, care of mentally or physically ill individuals; or work for schools or hospitals. This also includes all local, state, and federal government agencies. As of October 1, 2013, all employers will be required to provide this notice to new employees and offer notification to existing employees. The Department of Labor has provided an example of effective language and terminology to help communicate these changes appropriately. An example for companies that offer a health plan and those that do not offer a health plan can be found on the Department of Labor website.