A Component of Tucker Administrators’ Employee Benefit Risk Management Program
A Solution for Small Employers--Level Funding
Tucker Administrators has a solution for the small employer that brings:
- financial predictability,
- population-specific claims detail to identify the type and cost of claims
- plan design flexibility to manage those costs
The Tucker Administrators Level Funding Plan and is available to groups between 10 - 200 lives. It offers:
- Competitive rates
- 12/21 contract basis
- Internal pooling point maximizes potential for employer refund
- All industries eligible except law firms and MEWAs
- Group size: 10-200 lives
- Claims data is preferred for groups over 100 lives
- 25 lives minimum in North Carolina
- 10 lives minimum in South Carolina
- Unused claim fund is refunded to the employer at the end of the plan year
- Stop Loss insurance offers full protection from larger claims. Employer will never have to pay more than the maximum monthly cost
- The predictability of a level, monthly cost-there are no extra charges if there are high claims
- ERISA plan that is exempt from some of the new federal Affordable Care Act regulations
How is This Plan Different from a Fully-Insured Plan?
Under a fully insured plan, the monthly premium costs are locked in. Even if a group is healthy and have no claims, the savings are kept by the insurance company. With Tucker Administrators Level Funding, and the smart use of Stop Loss Insurance, the employer pays a monthly cost that is the maximum cost. No matter how much claims are in a month, the employer will never pay more than this monthly cost. After all claims are paid for the year, the unused money in the claim fund is returned to the employer.
Defined and Contained Risk
The employer's maximum exposure and annual costs are determined up front through the purchase of Stop Loss insurance. Standard provisions include coverage for claims paid after the end of the plan year (no terminal liability exposure).
Stabilized Cash Flow
Maximum annual claim liability is equally spread over 12 months. If the employer's claim fund does not contain sufficient money to cover claims, the Stop Loss insurance coverage will advance the necessary funds (also referred to as "Accommodation”). No requests for additional money from the employer are made.
After the claim run-out period remaining funds are released or rolled over to the next year as credit. This is the essence of alternative funding—money not spent on benefits remains with the employer’s benefit plan, not the insurance company.
What are the Advantages of the Funding Advantage Plan?
Plan Design Flexibility
Freedom to keep the current plan of benefits and implement cost-saving features of the employer's choice.
Maximum annual claims costs are predetermined and the employer pays 1/12 of this cost each month for the 12 months of the plan year. After this amount, there are no other charges for the claim fund. Once all claims have been paid for the plan year, the unused dollars in the claim fund are returned to the employer.
If at any time the money necessary to pay smaller claims is not in the claim fund (this is common during the early months of a plan year), the insurer will advance this money to the claim fund to pay these claims. Subsequent monthly payments into the claim fund will be used to repay this advance.
Each month, the employer will receive an accounting report on all claims paid during the month and the plan year-to-date. Each quarter, they will receive a detailed report about claims paid (subject to federal and state privacy regulations). This reporting provides the information necessary to fully track the claim fund and to understand where the claim fund dollars are spent (such as the doctor’s office visits, prescription drugs, outpatient services and hospitalizations). With this information, the plan can be designed to contain costs and target problem areas.
Plan Year & Terminal Liability
The plan year runs for 12 months from the effective date. Claims incurred during the plan year will be paid though a 9-month run-out period and any balance in the claims fund is refunded to the employer. Terminal Liability coverage is built into the plan by providing the 9-month run-out period.
RFP Submission Requirements
- Group name, industry and location
- Current rates
- Renewal rates
- Current plan of benefits
- Claims data, if available. If no claims data is available, we will provide a preliminary proposal that will require individual apps to bind coverage. Rates may be adjusted after underwriting of individual applications
Click Here for Level Funding Brochure
Click Here for Level Funding Enrollment Form