Summary
Often considered a hybrid approach, level-funded plans provide the stability of fixed premiums (similar to fully-insured plans) along with the ability to share in a degree of cost savings (a feature of self-funded plans). However, it is essential to understand that level-funded plans are generally considered self-funded plans for compliance purposes, including under the Employee Retirement Income Security Act (“ERISA”), Health Insurance Portability and Accountability Act (“HIPAA”) and the Affordable Care Act (“ACA”). This means that employers who sponsor level-funded plans generally take on more robust compliance responsibilities than they previously had when fully-insured.
Enjoy the benefits of the level-funding approach but do your due diligence and don’t be caught in one of the many traps for the unwary!
This paper describes the benefits of level-funded plans, and outlines key compliance considerations for employers looking to level-funding as their group health plan option.
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