{"id":5169,"date":"2021-07-08T10:00:00","date_gmt":"2021-07-08T10:00:00","guid":{"rendered":"https:\/\/sonusbenefits.com\/?p=5169"},"modified":"2021-07-08T10:15:04","modified_gmt":"2021-07-08T10:15:04","slug":"a-crash-course-in-group-health-insurance-plans","status":"publish","type":"post","link":"https:\/\/sonusbenefits.com\/a-crash-course-in-group-health-insurance-plans\/","title":{"rendered":"A Crash Course in Group Health Insurance Plans"},"content":{"rendered":"

When it comes to health insurance, people want the right amount of coverage. They also want coverage for what they see as high value (doctor\u2019s visits, medical procedures, etc.). There are many insurance plans out there\u2014the traditional fully insured plan, the level-funded plan, the self-funded plan\u2026and you may be wondering what the difference is between them, and where to even begin.<\/p>\n

Welcome to our crash course in group health insurance plans.<\/p>\n

Where it all began\u2014fully insured plans<\/h3>\n

Fully insured plans are probably what come to mind when you think of group health insurance plans. Employers get the plan from an insurance company (carrier) and pay a premium to the insurance company. The yearly premium rates depend on how many employees are enrolled in the plan. When employees make a claim, the insurance company writes a check to the healthcare provider (hospital, doctor, etc.). Employees are responsible for paying the deductibles and co-pays defined in the plan.<\/p>\n

A fully insured plan usually includes coverage for medical procedures, prescriptions, and doctor\u2019s visits. Employers tend to go the route of fully insured for their business if they want to give their employees predictable benefits that remain consistent over time and provide the business with a regular monthly fee to manage cash flow.<\/p>\n

New paths and steppingstones\u2014level-funded plans<\/h3>\n

Level-funded plans are the go-betweens, the bridge between a fully insured plan and a self-funded plan (which we will discuss in a minute). <\/p>\n

With level-funded plans, employers pay a set amount of money each month to the insurance company that funds a reserve account for claims and manages administrative costs and fees. Rates for a level-funded plan is defined by the number of employees and the estimated cost of anticipated claims. If the employer has a surplus of claims funds at the end of the year, they will receive a refund. If the claims are higher than estimated, they will receive a premium increase for any stop-loss coverage an employer has. <\/p>\n

Employers usually choose level-funded plans if they anticipate employees not making many insurance claims and want to offer their employees insurance at an affordable cost. It also allows ease of access to utilization trends<\/a> that show where employees might be overspending and allows employers to use education and wellness programs to improve claims costs.<\/p>\n

Rise in popularity\u2014self-funded plans<\/h3>\n

The popularity of self-funded plans is on the rise. A report published in 2020 found that 60% of workers in companies with three or more employees were on some kind of self-funded plan<\/a>. But how does it work, exactly?<\/p>\n

With self-funded plans, or self-insured plans, <\/em>an insurance company provides administrative services. Like with level-funded plans, there is a fixed cost for administrative fees. But unlike level-funded plans, employers assume all the costs and financial risks in a self-funded plan. They pay for employee health claims from a bank account or trust fund set up for that purpose.<\/p>\n

These plans have the highest amount of risk; however, employers can have stop-loss insurance that reimburses them for claims that exceed a predetermined level. There are two types of stop-loss insurance:<\/p>\n