Employer Health Plans for Kentucky & Indiana
CIP serves Kentucky and Southern Indiana businesses with employee benefits and risk management plans, including affordable employer health insurance plans at the core. We offer customized insurance funding options that maximize benefits while also lowering costs. In addition, CIP provides access to exclusive contracts with associations, level-funded and partially self-insured plans, and various underwritten small business solutions.
Resources For You
- The Commonwealth Insurance Partners Playbook (PDF)
- The Commonwealth Insurance Partners C-Suite Survival Guide (PDF)
Determining the correct insurance solution
With an extensive selection of insurance carriers to choose from, we first work with you to determine the right payment model, risk management, medical coverage, and wellness benefits for your company.
First Things First: Insurance Funding Options
Fully-Funded Group Health Plans
The biggest difference between fully insured (or fully-funded) and self-insured (or self-funded) is that the insurance carrier takes all the risk with a fully insured plan. The employer pays the insurance carrier a set premium price each year. If claims exceed projections, the carrier assumes all financial risk. The price and terms are fixed until the contract is up for renewal, so the employer has no real surprises. However, if claims are excessive, the premium for renewal will likely be higher.
Smaller businesses tend to go with fully insured plans because they have a lower appetite for risk and have fluctuating operating costs.
Pros of Fully Funded Plans:
- Month-to-month expenses and coverage terms remain the same.
- Low claims allow the employer to negotiate lower costs at renewal.
- Claims are managed by the insurance company (carrier).
- The insurance company assumes all the risk
Cons of Fully Insured Plans:
- Premium costs are likely higher than with self-funded and level-funded plans
- The contract must be renewed and re-negotiated each year.
- A year of high claims can not only mean higher costs at renewal with the current carrier but with other carriers as well, since claims history can be required, depending on the group size.
Self-Funded Employer Health Plans
The employer assumes most of the risk with a self-funded,
self-insured plan, meaning that the business pays for its employees’ medical claims and fees from its own assets. The business is the insurer. Therefore, while the employee can offer health insurance at much lower premiums to employees, it does so at its own risk if claims are higher than expected, especially if there are any catastrophic claims. Stop-loss insurance protects the business by setting a ceiling that they know they will not exceed in payouts.
Larger employers are more frequent users of self-funded plans, as they usually have more capital than smaller businesses.
Pros of Self-Funded Plans:
- Employers can reduce healthcare costs and save money. What was insurance company profit becomes employer savings.
- Employees can have more control over benefits.
- Employers gain a better understanding of healthcare spend
Cons of Self-Funded Plans:
- The employer assumes the risk.
- Cost reduction may not be immediate, as the employer may begin cautiously and face an early learning curve about risk and claims.
- The employer is responsible for benefits and services.
- Employer answers to issues with claims and coverage.
Level-Funded Employer Health Plans
A level-funded employer health plan (also known as a partially self-funded plan) combines the cost reduction and risk of self-funded and fully-funded plans by contracting the plan through an insurance company but negotiating an amount of the risk that the employer will assume. As a result, month-to-month payments can be more consistent and predictable but not as low as they could potentially be if self-funded.
Level-funded plans have become increasingly attractive to smaller employers, especially as an opportunity to ‘dip their toes’ into the self-funding payment model of assuming risk when they begin to offer their employees insurance and learn what they can expect from claims and costs.
Pros of Level-Funded Plans
- Potential for greater cost savings compared to fully funded plans
- Greater opportunity to customize health plans
- Reduced regulations and administrative responsibility that would come from self-funding
Cons of Level-Funded Plans
- Risks of level-funded plans all depend on how the employer and carrier define the risk-sharing. But you can
assume the carriers will place stringent conditions on claims to ensure that
their end of risk is as controlled as possible.