Level funded group health insurance plans are ideal for companies with 6 to 1,000 employees. With level funded plans, the insurance carrier uses employees’ current and past health to underwrite the policy. The bigger the group, the higher potential for savings, because risk is spread out over the group.

If the total claim amount is lower than what you project at the beginning of the plan year, your business will receive money back. Level funded plans could be a good option for groups with healthy employees.

Self-funded group health insurance or partial funded group health insurance plans are best for large businesses with 1,000+ employees. With these types of plans, the business owner “rents” the network and pays for claims as they’re incurred. The business reimburses the carrier for the difference between what the employee is paying and the contracted amount between the carrier and the business.

Partial funding works similarly, with the addition of the business owner purchasing reinsurance (also known as stop-loss) insurance to cap risk. These plans are customizable, in that business owners can set prices for expenses, such as office visit copays and prescriptions.

A professional employer organization (PEO) acts as an outsourced human resources (HR) team and manages administrative tasks, such as health insurance benefits, payroll, workers compensation and employee training. PEO group health insurance can work for employers with 15 employees or fewer that want to offer rich benefits to their team members.

A PEO can reduce insurance rates, because your team will join a larger group of people, resulting in the spreading of risk over the bigger group. You will typically have to pay a monthly administration fee per employee in a PEO, which will increase expenses and may deter some companies from choosing this option.

Signs Your Business May Be Outgrowing Its PEO

Life insurance is an insurance policy that provides coverage for your employees’ spouses and dependents, should the employee pass away. It helps ensure their family can continue to pay for essential expenses, even when their income is no longer available.

There are several types of life insurance employers may offer employees. These include whole life insurance, term life insurance and universal life insurance. Life insurance can be another value-add that helps employers attract and retain top talent.

Disability insurance covers employees should they experience a disability that impacts their ability to work. Covered disabilities include physical disabilities, mental disabilities and sickness.

Accident insurance is similar to disability insurance, in that it provides coverage for workers who are involved in accidents that impact their ability to work. Accident insurance can also extend to coverage for death due to an accident.

Similar to disability and accident insurance, critical illness insurance offers protection due to unforeseen circumstances – in this case, a critical illness. Typically, these plans pay out a lump sum payment for critical illnesses, such as cancer or a heart attack. The insured party’s dependents can use this payment to cover medical costs, lost income or whatever other expenses they want to use the funds toward.

A health maintenance organization (HMO) also limits coverage for doctors who are within the plan’s network. To see a specialist, you’ll typically need a referral from your primary care doctor.

An exclusive provider organization (EPO) limits coverage and only provides it for specific doctors, specialists and hospitals in the plan’s network.

A point of service (POS) plan offers accountholders savings if they use doctors, hospitals and healthcare providers within the plan’s network. To see a specialist while using a POS plan, you’ll typically need a referral from a primary care doctor.