Selecting a health insurance plan for your employees is harder than ever, with the exponentially rising costs and endless number of plans. Not only are there many different carriers to choose from, but there are also three different types of plans available:
- Fully-insured health plan: You may even call this the traditional insurance plan, where the employer pays a monthly premium and the insurance company pays all claims.
- Self-funded health plan: This is where the insurance company is paid an administrative fee and the employer acts as the insurer, paying the claims as they are incurred. This plan is typically a favorite of very large employers.
- Level-funded health plan*: This is a hybrid of the fully-insured and self-insured plans. The employer pays an estimated amount of claims and an administrative fee to the insurance company, as well as a stop-loss premium. If a company has claims above the estimate, they don’t owe anything additional and they are protected by the stop-loss insurance. On the other hand, if less than the estimate is paid out in claims over the policy year, a portion of the surplus is returned to the company. Not a bad deal for a healthy group, and a choice that is becoming popular with smaller employers.
*With the level-funded plan, there is a catch that does not appear to be mentioned or forewarned by agents o*With the level-funded plan, there is a catch that does not appear to be mentioned or forewarned by agents or the carriers. A business with this type of plan is required to report under the Affordable Care Act (ACA), no matter the size of the company. Therefore, if you are a business with just a few employees and have a level-funded health plan, you will need to file and provide Form 1095-B to each employee that had coverage in the previous year, by March 1, 2024.
For businesses that are already an applicable large employer (ALE), thus ACA compliant (those with over 50 full time equivalent employees,) you will need to file and provide Form 1095-C, completing Parts I, II, and III to your employees by March 1, 2024.
While we make every attempt to ensure the accuracy and reliability of the information provided in this document, the information is provided “as-is” without warranty of any kind. Romeo Chicco or PayMaster, Inc does not accept any responsibility or liability for the accuracy, content, completeness, legality, or reliability of the information contained. Consult with your CPA, Attorney, and/or HR Professional as federal, state, and local laws change frequently.
