HEALTH PLAN FUNDING OPTIONS

Fully-Insured & Level-Funded

Fully-insured and level-funded arrangements provide budgeting predictability, but at the cost of transparency and control. In these models, the carrier controls pricing, claims management, and access to data — leaving employers with limited insight into why costs are rising.

• Premiums are based on carrier estimates, not employer-verified claim performance.
• Financial reporting is opaque, limiting an employer’s ability to validate or benchmark spend.
• Vendors cannot be held to defined KPIs or performance guarantees.
• Stop-loss decisions (if applicable) are controlled by the carrier, not the employer.
• Best suited for employers with limited risk tolerance or restricted cash-flow flexibility.

Preferred Risk Pools, Consortia & Captives

Risk pools and captive programs allow small and mid-sized employers to participate in a more transparent and disciplined funding structure, often mirroring the financial advantages available to larger organizations.

• Access to credible claims data for understanding cost drivers and trend.
• Ability to select and manage vendors using measurable KPIs and SLAs.
• Flexibility to integrate independent pharmacy and clinical programs to reduce trend.
• Supports a structured governance calendar, audit processes, and financial dashboards.

Understanding Stop-Loss Protection

Stop-loss insurance is the foundation of responsible self-funding and preferred-risk pool participation. It protects employers from catastrophic claims while providing transparency and better long-term financial performance.

• Specific Stop-Loss: Caps exposure per individual claimant.
• Aggregate Stop-Loss: Caps total yearly liability across the group.
• Monthly Accommodation / Aggregate Factors: Smooth cash flow and minimize volatility.
• Risk layers can be structured based on claims history, financial goals, and risk appetite.
• Stop-loss should mirror the plan document to avoid gaps or unpaid claims.
• Contracts must be evaluated for exclusions, reimbursement timelines, and laser practices.

When properly designed, stop-loss becomes a strategic risk-management tool rather than a commodity purchase — enabling employers to govern their plan with discipline and financial control.