There’s a trend within the health care industry that combines the appeal of increasing budget control and decreasing financial risk for employers. That trend is level funding, and it may be just what you’ve been looking for.
Level funding is a hybrid financial strategy in health benefit planning. Similar to self-funded health plans, level funding is facilitated with the help of a TPA. Level funding differs from self-funding however in that an employer pays monthly premiums throughout the policy year. The amount paid each month covers the cost of claims, administrative services, and stop-loss insurance in managing the policy. The predictability of these monthly payments proves beneficial for organizations seeking to control their budget and maximize savings opportunities while incurring little to no risk in the process.
Level funding is the potential of receiving a year end refund if the total paid in monthly premiums exceeds what is paid out in claim coverage.