What Is a Level-Funded Health Plan and How Does It Work?
They are very similar to Nat General where you have to fill out a health insurance questionnaire. You then need to meet the health insurance company halfway and expose your medical records. To an extent, they do something called the GRx search.
What is GRx Search?
The insurance company will check what prescriptions you are taking and check if you're being honest with them. If you're relatively healthy, you're going to get much better rates than in the small group marketplace. Again, there are some limits, like you have to have a certain number of enrolled and this seems to be the wave of the future. You heard about Health Service Insurance (HSA) a lot over the last decade and Jim thinks this is going to be the wave of the future.
“You send in your health insurance questionnaire, and they approve you or deny you. And then, you get much better rates for almost identical plans in the small group marketplace.”
How Does Claims Account or Claims Reserve Work?
The one really great thing about Nat General and the level-funded products is they have something called the Claims Account.
This is how it works:
Oxford uses an actuarial and for example, they say, “we're putting aside $20,000 for claims”. And then let's say that you had a really good year and only $5,000 is used in claims. That gives you a $15,000 leftover balance. What will happen? The insurance company is going to reimburse you 50% of that.
Depending on the carrier, they're either going to give you a $7,500 credit towards your bill, or they're going to cut you a check for $7,500 as the employer.
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That again saves you money as the owner of the company in health insurance premiums. And that seems to be a huge selling point as an employer if you're looking to offer an insurance plan. It saves you money in premium, and you get the refund in the Claims Account because most people don't use their plan to that level especially if the group has a census that is very, very young.
ABOUT JAMES RESTAINO
James Restaino is part of Relax Benefits. He is a Managing Partner/Broker at Specialized Health Services LLC, an Employee Benefits Company that specializes in group health insurance, life insurance, and dental/vision insurance servicing companies in New Jersey and New York. His ideal clients are companies that have at least 2 enrolled employees on Employee Benefits. With his 25 years of experience, he can help you find the right coverage for you or your employees.
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