Forty-two percent of small firms in 2021 have a level-funded plan compared to only 13% last year. The trend may reveal a significant shift in the small group market toward health-status-based rating, according to a Kaiser Family Foundation survey.
In the past few years, insurers have begun offering health plans with a nominally self-funded option for small or mid-sized employers. These plans incorporate stop-loss insurance with relatively low attachment points. Often, the insurer calculates the employer’s expected monthly expense. It includes a share of the estimated annual cost for benefits, stop-loss premiums, and an administrative fee. The employer pays this level premium amount, with the potential for some reconciliation between the employer and the insurer at the end of the year if claims differ significantly from the estimated amount.
Since these policies are sold as self-funded plans, they are not generally subject to state requirements for insured plans. Also, if they are sold to employers with fewer than 50 employees, they are not subject to ACA rating and benefit standards for small firms.
Firms with 3-49 Workers |
Firms with 50-199 Workers |
All Small Firms | |
---|---|---|---|
Enrolled in a Self-funded Plan | 16% | 27% | 21% |
Enrolled in a Level-Funded Plan | 37% | 38% | 45% |