Employer Health Plans for Kentucky and Indiana

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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.

With an extensive selection of insurance carriers to chose 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.

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