By Andy Yost

When deciding on funding strategies available to you and your business when it comes to financing your health plan, there are several options to consider. Let's understand the three main funding strategies: fully insured, level funded (or mini self-funded), and self-funded insurance.

Here's a breakdown of each:

Fully Insured:

• In this funding strategy, the insurance carrier assumes all the risk.
• Employers pay a monthly premium, and employees receive medical coverage with little to no risk on their part.
• However, there's limited transparency regarding how premium dollars are utilized, potentially resulting in overpayment relative to claims.

Level Funded (or Mini Self-Funded):

• This approach resembles a fully insured plan, where businesses pay a fixed monthly premium for health coverage.
• Behind the scenes, funds are allocated for administrative fees, reinsurance, and claims.
• Any surplus in the claims pool at the end of the plan year may result in a refund or rebate to the employer.

Self-Funded Healthcare

• Under a self-funded plan, the business assumes the risk, with certain caps in place.
• Fixed costs cover administrative fees and stop-loss insurance, while the bulk of expenses are attributed to potential claims.
• Employers are responsible for covering employee claims up to specified limits.

Additionally, there's another strategy worth mentioning: the Individual Coverage Health Reimbursement Arrangement (ICHRA). For more details on this, check out my video dedicated to health reimbursement arrangements.

Understanding these funding strategies can help you make informed decisions about your business's healthcare financing. If you have further questions or need assistance, don't hesitate to reach out.