Employers that want to put as much distance between their health plans and markets heavily affected by the Patient Protection and Affordable Care Act (PPACA) underwriting rules may like the idea of trying a level-funded stop-loss plan.
A typical level-funded health stop-loss plan is aimed at an employer with about 20 to 200 lives that wants to self-insure but can’t accept much fluctuation in benefits costs.
The employer puts a set amount of money in a claim fund each month. If claims eat up the money, the stop-loss carrier absorbs the extra costs. If some money is left over at the end of a year, or other designated period, the employers gets money back.
Some of the firms that have been offering level-funded stop-loss arrangements include The Benefit Group Inc., East Coast Underwriters L.L.C., Healthcare Choice L.L.C. and Frenkel Benefits L.L.C.
One challenge may be that some state regulators, the Centers for Medicare & Medicaid Services (CMS) and the parent of CMS, the U.S. Department of Health and Human Services (HHS), see small employer flight to self-funded plans as a potential threat to the fully insured small-group market.