Self-funded health insurance is becoming more and more popular these days. While this strategy isn’t right for everyone, we’re finding that more and more companies should go this direction.
One of the big selling points to going self-funded is that if you and your employees don’t spend as much money on claims in a year as you thought, you get to keep the unspent money! This unspent money is often referred to as Surplus.
If you have a Fully Insured health insurance plan, you’re familiar with the fact that you never get any of the premium you spend back. In fact, instead of money back, you usually end up with a renewal offer that increases your price every year even if you had a low claims year. They never tell you how much of your money was left over, why? Because in plans like these your surplus gets called something else: EXTRA PROFIT. That’s right, the insurance company gets to keep all of it.
For companies looking for something in between Fully Insured and Self Funded, there is Level Funded health insurance. These plans are becoming increasingly popular because they are a hybrid of the two concepts. Level Funded health insurance plans give you a share of your Surplus. It can be a 50/50, 60/40, or 70/30 split at times. It just depends on the way the contract is written by the insurance company.
So here’s the question…
if you are signing up with one of these Level Funded arrangements, what are you getting in return for this split of your Surplus? Going with a self-funded plan gives you 100% of your Surplus back. So why are you giving up one half to one third of that unspent money?
It could be that you are ready to take that next step toward a Self-Funded health insurance plan where you can keep all of your unspent claim dollars!
We’ve been helping companies of all types and sizes evaluate their different insurance options. Click here to have us reach out and evaluate what type of plan would be best for you and your company.
– Knudson Benefits Group
