What Are Your Options for Affordable Small Business Health Insurance?

The Affordable Care Act (ACA) introduced several challenges for employers with fewer than 50 employees. One significant change was the elimination of medically underwritten policies, which spread health risk across all employers. This led to healthy employer groups subsidizing less healthy ones, driving up costs for many small businesses. However, this shift also opened the door for innovative insurance solutions, such as level-funded health plans, to offer more tailored and cost-effective options.

Level-funding has become an increasingly popular option for small employers. At its core, level-funding is a form of self-funding, typically managed by a third-party administrator or an offshoot of a fully-insured carrier. This approach allows small businesses to enjoy some of the benefits of self-funding, such as lower premiums and potential refunds, while minimizing the financial risk.

In many states, including the Carolinas, level-funded plans can be offered to small employers with as few as two employees. Unlike traditional self-funding, which may expose businesses to significant financial risk, level-funded plans include stop-loss insurance that kicks in when claims exceed a certain threshold. This provides small businesses with a safety net, protecting them from large, unexpected claims.

One of the primary advantages of level-funded plans is their potential to lower health insurance costs. Unlike fully-insured plans that require community rating, level-funded plans are underwritten based on the specific health profile of the business’s employees. This means that if your workforce is relatively healthy, you could see significant savings compared to traditional insurance plans.

Level-funded plans also offer more transparency in terms of claims data, allowing businesses to better understand where their healthcare dollars are going. This data can be invaluable in identifying areas where wellness programs or other interventions could further reduce costs.

For small businesses that can tolerate more financial risk, self-insured (or self-funded) plans are another option. In a self-insured plan, the employer assumes the financial responsibility for providing health care benefits to its employees. This approach can offer significant savings if the company’s workforce is healthy and claims are low. However, the employer also takes on the risk of high claims, which can result in substantial costs.

To mitigate this risk, businesses often purchase stop-loss insurance, which provides protection against catastrophic claims that exceed a certain threshold. While self-insured plans are more commonly associated with larger companies, they can be a viable option for smaller businesses that have a good understanding of their employees’ health needs and are willing to manage the associated risks.

Several major insurance carriers have recognized the growing demand for both level-funded and self-insured plans and have introduced options tailored to small businesses. In the Carolinas, the following carriers are leading the charge:

• UnitedHealthcare Level-Funded Options:

Offers level-funded options that cater to small businesses with as few as two employees, making them a flexible choice for even the smallest firms.

• Aetna Level-Funded Solutions:

Provides comprehensive level-funded and self-insured plans with a strong focus on wellness programs and preventive care, helping businesses manage long-term healthcare costs.

• Blue Cross Blue Shield of North Carolina (BCBSNC) Level-Funded Plans:

In North Carolina, BCBSNC offers level-funded plans for businesses with 12 or more eligible employees with a 70% minimum participation rate, and a minimum of 5 employees enrolled. Their plans are known for robust provider networks and extensive coverage options.

• Blue Cross and Blue Shield of South Carolina (BCBS SC) Level-Funded Options:

BCBS SC offers level-funded options designed specifically for small businesses, combining the flexibility of self-funding with the stability of fully insured plans. Their offerings are known for comprehensive coverage and extensive provider networks across South Carolina.

• BlueChoice HealthPlan Level-Funded Solutions:

As a subsidiary of BCBS SC, BlueChoice HealthPlan provides level-funded solutions with an emphasis on cost control and tailored plan designs, making them a strong contender for small businesses in the Carolinas.

As you review your health insurance options for the upcoming year, consider exploring level-funded or self-insured plans, especially if your workforce is generally healthy and you’re open to managing some financial risk. These plans can offer substantial cost savings and more control over your healthcare spending, making them an attractive option for small businesses looking to provide valuable benefits without breaking the bank.

With the right approach, you can offer your employees the quality health insurance they need while keeping your business’s finances in check. Whether you’re in the Carolinas or another state, it’s worth consulting with a knowledgeable insurance broker who can guide you through the available options and help you find the best fit for your business. Call Marty Haynes at 803-804-1876 for a free consultation.

Employee Concierge Service     Employee Benefits      The Ultimate Guide to Commercial Insurance