About

Alternative Funding Plans

Waterbury & Associates

Intro

Alternative Funding Plans 

How do employers with fully-insured health plans receive greater monetary credit for historically positive claim experience?

Employers with good long-term health plan claim experience have plan options available to them that other employers, with historically poor claims experience, do not have access to.

Over the past few years, the markets have developed both Level Funding and Stacked Plans to appeal to those employers with historically positive claim experience.

Level funding and Reference Based Pricing (RBP) plans offer small employers the ability to be medically underwritten with the carrier’s plans priced upon the general health of the employee population. These plans, like fully-insured health plans, offer the employer the security of a set predetermined monthly premium. Level funding and RBP plans further reward the employer with the ability to receive a return of paid premiums, provided the group’s paid claim experience falls below a predetermined threshold.

The stacked plan combines the tax-free benefits of a Health Savings Account (HSA) with an employer funded “pay-as-you-go” Health Reimbursement Arrangement (HRA).

How does a stacked plan work?

 An employer purchases a fully insured HSA-qualified High Deductible Health Plan (HDHP) with a health insurance carrier.  Using the premium savings generated by the HDHP, the employer offers a Health Reimbursement Arrangement that reimburses employees for any eligible claims incurred between the employee deductible responsibility (shown below in red) and that of insurance carrier’s HSA deductible (shown below in black). The HRA account is an employer unfunded account, with remaining year-end balances set to either i.) expire at year-end, or ii.) to be rolled over into the forthcoming year.

A stacked plan design example may look like:

Employers can be modified the plan’s deductible and out of pocket parameters.  The stacked plan reduces the employer premium due to moving to a high deductible plan. Premium savings can be used to fund the HRA should claims exceed the employee deductible.

Fully Insured HDHP

Deductible: $6,000 Single & $12,000 Family

100% Coinsurance thereafter.

HRA Employer Corridor Responsibility

Beginning at $2,001 Single & $4,001 Family

Up to $6,000 Single & $12,000 Family

(HRA Risk $4,000 Single & $8,000 Family)

Employee Responsibility

Up to $2,000 Single & $4,000 Family

Funded by HSA or Out of Pocket

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St. Paul, MN 55105

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​651.269.0322