Corporate Benefits Service, Inc. Expands Due to Employers Increasingly Looking to Self-Insure With a Level Funded Product

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Level Funding provides a unique answer for a market starving for an alternative to conventional insurance, especially for small employers looking to save money on the cost of group health insurance and facilitate the transition into the Self-Funded Arena.

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The trend towards self-funding stems from employers’ desire to maintain a level of flexibility and control in the design and financing of their employee’s health benefits,” commented Richard Phillips, President of Munich Health North America’s Reinsurance.

As employers continue to grapple with ever-increasing health care costs, Corporate Benefits Service, Inc. has seen companies increasingly looking for affordable options through self-funding with a level funded product, also referred to as partial self-funding.

Many large, Fortune 1000 companies already self-insure their employee health benefits, and the concept is far from new. Smaller groups have begun to realize the opportunity to take advantage of the level-funded option. Brokers in the Charleston area said they have seen an uptick in inquires about self-insuring with a level funded product as a means of creating a bit more flexibility in an otherwise inflexible, tightening marketplace.

Ken Harvey, the President of Corporate Benefits Service, Inc. has said they have had to hire several new employees and expand their office space to handle the increasing amount of new business that has stemmed from the level funded product.

“Companies with fully insured health benefits do not receive claims experience from the carrier but are seeing rate increases between 20-40% with no explanation as to why. All they see is premiums and they aren’t seeing what the actual claims usage of the group actually is,” he said. “And that’s something we provide. This gives employers a sense of how the medical expenses are being utilized and gives them the ability to design a plan that fits the needs of employees.”

“The trend towards self-funding stems from employers’ desire to maintain a level of flexibility and control in the design and financing of their employee’s health benefits,” commented Richard Phillips, President of Munich Health North America’s Reinsurance Division.

Level-Funded plans enable employers to reign in out of control, escalating healthcare costs while simultaneously affording those companies transparency, flexibility and control over their employee benefit plans. In an ever changing healthcare environment, level funding gives employers the opportunity to identify cost drivers and mitigate risk. A company can design their benefit plan in a way that specifically suits their needs, as opposed to an “off the shelf” conventionally insured plan. Furthermore, employer’s regain control of their bottom line granting them the peace of mind that has been lost over these last few years of uncertainty in the healthcare sector.

The combination of financial predictability along with the control and information employers need makes level funding a highly effective product. Under a fully insured plan, monthly premium costs are fixed. Even if a company is healthy and has no claims, the insurance company keeps the savings. However, with a level funding plan an employer never has to pay more than their monthly cost, no matter how much claims are in a month. After all claims are paid for the year, any unused money in the claim fund is returned to the employer. Level Funding offers employers the best advantages of the conventionally insured market as well as the best advantages of the self-funded market.

  •     Defined and Contained Risk (transparency) - An employer’s maximum risk exposure and annual costs are determined up front through the purchase of Stop Loss insurance (catastrophic/unexpected/expensive claim insurance), basically a backstop in terms of baseball. Coverage for claims paid after the end of the plan year comes standard.
  •     Stabilized Cash Flow (flexibility) - If the employer’s claim fund does not contain sufficient money to cover claims, the Stop Loss insurance will provide the necessary funds in advance. No requests for additional money from the employer are made.
  •     Claim Fund (control) - After the claim run-out period, any remaining funds are returned to the employer. Money not spent on benefits remains with the employer, not the insurance company.

Since 1947 Corporate Benefits Service, Inc. has dedicated itself to providing the highest possible value to its clients by transforming healthcare costs from just an expense against the bottom line into an investment in human capital with measurable outcomes. Corporate Benefits Service, Inc. provides a comprehensive risk management strategy that is client specific with accountable and integrated clinical management, claims management, specialty networks and concurrent reporting.

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Charlotte Harvey
Corporate Benefits Service, Inc.
+1 704-564-8839
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Charlotte Harvey
since: 12/2011
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