Flexible Funding Options

**Buy Less Insurance at Lower Costs**

We understand that when purchasing insurance, you typically only get back 60 to 70 cents for every dollar spent - that is not the best investment! I-Care built a model that helps credit unions buy less insurance at lower costs. We'll help you explore everything from Fully Funded, Level Funded, and Self Funded options, to our unique and collaborative Group Self Funded solution created through an insurance captive managed by our I-Care participants. This innovative and one-of-a-kind funding solution adds a layer of protection for credit unions interested in moving toward a self-funded program.

Read our White Paper on Optimal Models to Fund Your Employee Benefits

Funding Options From I-Care

Fully Funded Plan
- A fully funded insurance plan is structured so that an employer purchases health coverage from an insurance carrier for a per-member premium. While relatively stable, these premiums can fluctuate based on the size of the company, employee health, and healthcare usage. The insurance provider assumes the risk that the employees will use their healthcare, and pays for that in accordance with their selected plans. However, if the employees are healthy and don’t use the healthcare, the employer still pays the same amount. If there’s a difference between the amount of healthcare that an employee uses and the premium that the employer paid, the money is essentially lost to the employer.

Self Funded Plan
- In a self funded plan, the risk transfers over to the employer, but so do the potential benefits. Under this arrangement, employers will partner with an insurance carrier or a Third Party Administrator (also known as a TPA) to provide the tangible employee coverage, but the employer shares responsibility for members’ claims. In comparison, the money that would normally be going to the insurance carrier in a fully funded plan is now being spent by the employer. The upside to this is that in a fully funded plan, the employer would not be compensated if there’s a portion of the premium that isn’t used. At a certain point, employers save money by switching to a self funded plan because they save money if employees are healthy. The less claims they have, the less money they spend. No fixed premium to worry about.
  However, if employees file a lot of claims in a year, the expenses can add up quickly with the employers funding them all. To mitigate this, employers often invest in what’s called “stop-loss” insurance, which shifts the liability for payments back to the insurance company if costs rise above a certain deductible. On one hand, stop-loss insurance helps to relieve some of the risk of a self-funded plan, but these plans aren’t free. The trade-off between money saved thanks to self-funded plans and money spent on stop-loss insurance is a factor to consider when evaluating self-funding.

Level Funded Plan
- A level funded health plan is a type of self-insurance. This means that your business pays for employee health care expenses itself, rather than passing the costs on to an insurance company. When you pay premiums for a self-funded plan, part of the money is set aside in a pool that will be used for future employee health care expenses.
  Level funded (or balanced-funded) plans are so called because the monthly premium stays the same — that is, level — throughout the entire year. With other self-insured plans, the monthly premium can change depending on how much employees spend on health care. The consistency offered by level funded plans makes budgeting easier. To achieve it, these plans include stop-loss coverage, which sets an annual limit on how much you can owe for employee expenses. If expenses exceed this point, the stop-loss insurance will cover any remaining costs for the rest of the year. This means that your quoted monthly premium won’t change.

Reference Based Pricing
- Reference based pricing is a funding option which falls under self funding. In this model, the employer sets a pricing cap on the maximum amount they would cover when it comes to certain medical services. This is done through third party administrators who facilitate the process to eliminate employer involvement. Typically, the pricing cap is derived from Medicare and is set at 120% to 175% of what Medicare pays. Considering the average PPO plan pays upwards of 300% of Medicare, a reference-based pricing model will create a significant savings opportunity. By eliminating the traditional PPO network/contract, this also allows members to seek services without the restriction of a specific, defined list of providers. While not all providers accept Medicare and therefore a plan using Medicare as the cost basis, employers should be aware that provider access or refusal to accept the plan can arise, but typically only on a very small percentage basis.

Reduce costs, lower risk, and enhance your employee benefits by joining the I-Care Community.