For Third Party Administrators and Stop Loss Carriers:
Level funding arrangements are self-funded arrangements that cater to smaller employers. Groups purchase stop loss insurance with relatively low risk exposure levels which limit the downside to the employer. Level funding has become increasingly popular product as smaller groups look to self-funding and many carriers have introduced such products in recent years.

Typical self-funding causes some cash flow issues as the health plan expenses can vary significantly from month to month as claims take place during the year. Level funding avoids this issue by providing a fixed premium equivalent that represents the maximum exposure for the employer. If by the end of plan year the actual claims are less than the pre-funded amount the group can receive a refund. This model can be appealing to employers who are not yet comfortable with self-funding. By paying a fixed amount the level funding product has the look and feel of a typical insured plan.

The RiskVantage team has experience working with TPA’s to design, market and implement a level funding product. This includes drafting stop loss contract language and working with the insurance department to gain regulatory approval for those carriers who wish to offer their own stop loss product. For those who wish to utilize other stop loss carriers, Risk Vantage will identify stop loss carrier partners and work with those carriers to customize their offering and negotiate premiums.

The RiskVantage algorithm complements the level funding offering. As with any self-funding offering it is important for the employer to understand if self-funding is a good fit given their risk profile. Even though Level Funding is structured to make it feel like an insured product it truly is a self-funded plan so an employer needs to understand their risk.

The algorithm results also provides essential information to the stop loss carrier. From the perspective of the stop loss carrier there is risk involved with providing coverage to smaller employers where data is limited. The potential gain fromn premium collected is small as compared to the downside if the group performs poorly. The Algorithm can be utilized to gain a more complete picture of the risk profile for the group. This provides the stop loss carrier with confidence to price the stop loss competitively. The output from the algorithm can be utilized as part of their underwriting process to rate each employer appropriately.

RiskVantage is available to consult with a TPA and stop loss carrier to develop a level-funded product from start to finish. RiskVantage will help in designing products offerings and in the selection in vendors such as wellness providers to create an attractive package with components that work together to keep costs low. RiskVantage can also continue to support the product by providing reporting needed to manage the product on an ongoing basis.