A level funding case study ...
One of my clients has an April 1 plan year start date.
This company is in the HVAC space, and they have 9 benefit eligible employees.
For the last two years, we have had them on a level-funding program.
If you’re not familiar with level funding, this is a funding model that requires a group of their size to complete individual medical questionnaires. The underwriters then tailor the rates specifically to the group.
Rates consist of three things: administrative, claims and another type of insurance called stop loss, which kicks in when/if the claims bucket is exceeded. If there are funds left in the claims fund at the end of the year, the company may receive a portion of that surplus back.
So, the first year, they had a great rate. Their claims ran really well, and they had a nice surplus..
At renewal, they received a little bit of a rate increase. Everyone was happy with the coverage and rates. We did look at other options, but they stayed.
This year, they received another small rate increase.
So, we went to market.
Their renewal rate for the existing 2500 deductible PPO plan was 538.65. However, by going through underwriting again and changing carriers, a comparable plan is now 401.41.
That is a significant savings for them.
It was a large enough amount to forego the surplus with the existing carrier.
Almost 15,000 for the year.
Isn’t that great?
If you’d like to learn more about an underwritten plan to see if it’s a good fit for your organization, please let me know!