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This is the “Benefits Strategy & Cost Management” section of the Employee Benefits FAQ Library.
Health insurance premiums often increase due to several factors, including:
Employers often review plan design and carrier options each year to manage these rising costs.
Employers may implement several strategies to help control healthcare costs while maintaining quality benefits. Common approaches include:
Working with experienced benefits advisors can help employers identify cost management opportunities.
A level-funded health plan combines features of fully insured and self-funded health plans. Employers pay a fixed monthly amount that covers expected claims, administrative costs, and stop-loss insurance.
If claims are lower than expected, employers may receive a refund or credit at the end of the plan year.
Level-funded plans may offer potential cost savings for some employers.
In a self-funded plan, the employer assumes the financial responsibility for paying employee healthcare claims rather than purchasing a fully insured plan from a carrier.
Employers often purchase stop-loss insurance to protect against large or unexpected claims. Self-funded plans are more common among larger employers but may be considered by mid-sized companies as well.
Stop-loss insurance is a policy that protects self-funded employers from extremely large healthcare claims. It reimburses the employer when claims exceed a predetermined threshold.
There are typically two types of stop-loss coverage:
Stop-loss coverage helps reduce the financial risk associated with self-funded health plans.
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