We are all looking for ways to better manage our benefit dollars. Prices have not only have increased, but dropping the definition of full time from 40 hours to 30 hours, has forced many businesses, to reallocate people's hours. In addition, businesses with 51 employees are still required to offer health coverage. Operative word is offer health coverage.
During the Obama years, many carriers ignored their participation rules (Kind of like the government deciding which rules are in vogue and which are out of vogue, but not getting rid of out of vogue rules). Today, we have a new president with a different view of the world. They are going back to the old rules of 50% of the total group and 75% of the eligible staff even though we are still operating under the Obamacare rules. This is going to be an awkward transition period considering we are clueless where this is actually going. Unfortunately, you cannot get an accurate read from the media as the current president is an anathema.
The level funded option for medical plans is one of the better mouse traps that came out of the Obamacare rules. This was a way to try and regain some control over benefit programs, for smaller businesses that was taken away by the Federal government In its simplest form, (comparison to your typical fully funded plan), you pay the premium just like you have always done and there is no difference. The claims portion or claims bucket of the premium and the fixed costs of the insurance are broken out, or unbundled. For example, when you take your car in for repairs, the garage does not just say you owe us $572.14, instead they break down the individual charges that totaled the $572.14. If you do not spend all of the claims budget you get to use the remaining portion of the claims bucket for future employee benefits rather than let the insurance company have it. Remember that in most years you will not spend all the claims bucket or the Insurance carriers would not still be in business.
Based on history, insurance rates will continue to rise BUT now you have some money in the claims bucket to offset your rate increase. Your maximum exposure is still your monthly premium, just like it always was with fully funded plans.
Your company should take a serious look at this as an option. Level funding works in all different states, so we can help you even if you are not located in Arizona. Call me now so we can talk more. Part II, of this series, will cover the advantages of plan designs with level funded plans.