Is Level-Funded Health Insurance Right for Your Business?

Chris Freitas • 3 September 2024

Level-funded health insurance is becoming more popular among small organizations, allowing them to maintain reasonable health and cover better benefits. This method of benefits funding allows employers to stay within their budget for healthcare costs while offering comprehensive insurance to their workers. So, is level-funded health insurance appropriate for your business? Let’s discuss the potential benefits and setbacks of this funding strategy.

Don’t hesitate to contact a KBI Benefits representative for personalized employee benefits assistance.

Understanding Level-Funded Health Insurance

Level-funded health insurance is a practical choice for small businesses when addressing healthcare costs without neglecting the health needs of the employees. With this approach, the employer pays a fixed monthly amount, which is used for claims, administration, and stop-loss. When there are lower-than-anticipated claims, the extra claim dollars are divided between the employer and the medical carrier, enabling businesses to recover some funds.

This arrangement not only assists in tightening up your small business’s budget, but it also ensures that employees have access to the benefits they’re looking for without fearing rising insurance costs. As an increasing number of smaller employers seek better health insurance coverage to attract better talent, it is important to understand how you can improve your benefits without ballooning your budget.

Cost Benefits of Level-Funded Plans for Employers

One of the significant benefits posed by the level-funded health plans is the quick reduction in operating expenses for an employer. KBI Benefits has helped small to medium-sized businesses save 15-25% on their employee benefits expenses, which makes these plans a prudent option for budget-conscious organizations.

As the employment sector gets more competitive, level-funded plans are likely to be used by more companies to maximize the company’s ROI on their employee benefits. With the right combination of quality benefits and affordable rates, businesses see lower employee turnover and more qualified applicants looking to work for them, which helps them grow more sustainably.

How Stop-Loss Insurance Supplements Your Level-Funded Health Insurance

Stop-loss insurance is a valuable asset to employers who have adopted level-funded health plans. With stop-loss insurance, the company can narrow its risk of incurring prohibitively expensive healthcare costs in the case of an employee requiring a significant amount of coverage, as all expenses incurred by the company will be covered above this limit. Based on the above, it means that businesses can know their health costs’ upper bounds while still providing competitive employee benefits.

In addition, stop-loss coverage may help restore business expenses so that utilization of large expenses wouldn’t interfere with the overall health of the company. It has also become crucial that stop-loss insurance be part of your level-funded plan, not just financially but also to promote the future health of the business as healthcare costs keep rising.

Comparing Level-Funded vs Traditional Health Insurance Funding

Unlike traditional plans, which have fluctuating premium increases every year that make it difficult for employers to manage healthcare costs effectively, level-funded plans offer a set monthly amount that makes budgeting more predictable. This is advantageous for companies who need to provide high-quality medical care while simultaneously being able to forecast the potential cost. Compared to traditional health insurance funding options, employers can stand to save up to 15-25% when using level-funding without compromising the quality of their benefits.

By understanding the unique features that level-funded health plans bring to the table, small establishments can manage their healthcare expenditures and improve employees’ satisfaction all at once. Speak with a KBI Benefits broker today and discover how your business can start saving on better employee benefits.

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Employee Benefits Education for Younger Employees

by Chris Freitas • 23 January 2025

For younger employees stepping into the workforce, navigating employee benefits can feel like deciphering a foreign language. This lack of understanding often results in missed opportunities to maximize benefits and unnecessary expenses for both employees and employers. The solution? Comprehensive education. By helping younger employees understand their benefits early and effectively, employers can empower them to make informed decisions, leading to improved satisfaction, cost savings, and overall well-being. Here’s how employers can take actionable steps to educate their younger workforce on employee benefits. 1. Start with the Basics Young employees, particularly those new to the workforce, often lack foundational knowledge about insurance and benefits. Start with a "Benefits 101" approach, covering essential topics such as common insurance terminology, how group health coverage works, and the importance of enrollment deadlines. Breaking down these concepts into digestible pieces will give employees the confidence to engage with their benefits plans. Providing user-friendly resources like glossaries of key terms, FAQs, and introductory guides can make this foundational education accessible and engaging. 2. Highlight the Value Younger employees are more likely to engage with benefits education when they see personal value. Explain how understanding their benefits can lead to smarter healthcare decisions, financial savings, and even long-term investment opportunities. For instance, show how researching provider networks can significantly reduce out-of-pocket costs or how contributing to a 401(k) early can yield substantial retirement savings. Focusing on tangible benefits helps employees connect the dots between learning about benefits and improving their overall quality of life. 3. Use Varied, Engaging Formats Gone are the days when lengthy handouts and dense white papers were the only options for benefits education. Younger employees respond better to diverse and interactive formats. Consider using: Videos to explain complex topics in a simple, visual manner. Infographics to break down key points. Email series to provide regular, bite-sized education. Interactive webinars for live Q&A sessions. Posters and flyers for quick reminders in shared spaces. By diversifying your approach, you can keep employees engaged while reinforcing important messages. 4. Make It a Continuous Process Benefits education shouldn’t be limited to onboarding or open enrollment periods. Make it an ongoing effort throughout the year. Create a communication calendar to share relevant topics each month, such as how to use telemedicine, when to visit urgent care versus the ER, or how life events affect benefits. Regular education keeps benefits top of mind and helps employees feel supported as their needs evolve over time. 5. Encourage Questions and Provide Support Even with robust educational efforts, employees will still have questions. Ensure your HR team is equipped to answer these inquiries promptly. Designate a dedicated benefits specialist who can respond to emails, attend meetings, and offer personalized guidance. Additionally, consider scheduling one-on-one meetings before open enrollment. These private sessions provide a safe space for employees to ask questions they might hesitate to bring up in larger group settings. Why Benefits Education Matters Educating younger employees about their benefits isn't just about helping them understand health insurance jargon; it's about equipping them to make informed decisions that positively impact their lives and your organization. Employees who understand and value their benefits are more likely to utilize them effectively, reducing unnecessary costs and increasing overall satisfaction. Build a Better Benefits Plan with KBI Benefits At KBI Benefits, we understand the importance of a well-designed benefits plan paired with effective education. Our team can help you craft an attractive benefits package that meets your employees’ needs while providing the resources and support to ensure they know how to make the most of it. Investing in benefits education not only improves employee satisfaction but also boosts productivity and loyalty. Speak with a KBI Benefits agent today to take your team’s performance and well-being to the next level!