Obamacare is great for small businesses with less than 50 employees who have a history of large health claims. But what if the business is made up of healthy workers?
Since health history can’t be considered under the Affordable Care Act (ACA), insurance carriers must offer all employees the same premium with the only adjustments being for age, tobacco use and family size. This can often mean employers with the healthiest employees are paying the same premiums as employers with an unhealthy employee population.
For this reason, we are recommending employers who offer health insurance to at least 10 employees take a look at Level–Funding. With Level-Funding plans, a portion of the premium is set aside for the purpose of covering employee health claims, rather than paying the higher fully-insured premiums per employee. Coupled with a stop-loss policy, small companies are then protected from higher than expected losses from claims. If employee claims are less than anticipated during a plan year, a refund check is issued to the employer.
These plans are not subject to the same ACA “community rating” and other requirements, but they have many of the same benefits, and offer the same look and feel of a traditional health insurance plan. Level-funded plans give the employer more flexibility, allowing the plan design to provide an even greater benefit to the employees at a much lower cost than traditional fully-insured health plans.
These plans are not for every employer. Contact L & A Services for professional guidance and to obtain a quote.