There are a lot of ways that employers can offer health insurance coverage for their employees. Two of the most popular group plans include fully insured plans and self-funded plans. Both of which can offer your company full coverage with great benefits and affordable premiums, but with Aetna Funding Advantage (AFA), employers may be able to save even more on the cost of health insurance. Here’s what you need to know about AFA.
Fully Insured vs. Self-funded Plans
It’s not always easy for smaller businesses to offer comprehensive health insurance coverage for their employees at an affordable price, but there are two popular group insurance options utilized by businesses all over the country:
- Fully insured plan – The employer pays a monthly premium to an insurance carrier, and the carrier pays the group’s claims.
- Self-funded plan – The employer sets aside funds every month based on the employees’ anticipated utilization of health insurance benefits. The employer then pays the group’s claims out of the fund.
Self-funded plans are typically more popular with larger companies that can cover unexpectedly high claims without affecting cash flow. However, many small businesses are starting to use self-funded plans for their health insurance needs, especially with programs like Aetna Funding Advantage (AFA).
What is Aetna Funding Advantage (AFA)?
The main reason that small businesses don’t gravitate toward self-funded plans is because of cost. If employee claims go through the roof and exceed the fund the employer has set aside, it could hurt business cash flow — especially for small businesses that might not have an excess of savings.
Aetna Funding Advantage (AFA) is a health insurance plan option that gives smaller businesses the flexibility and savings of a self-funded plan with the security of a fully insured plan.
Technically, Aetna Funding Advantage is a self-funded health plan. However, the employer doesn’t just set aside money in a fund to pay out for claims. Instead, they pay a monthly premium based on the health trends of the group’s employees with a set maximum claim amount.
If health care costs for employees are higher than the maximum claim amount, a stop-loss insurance kicks in to protect the business from large aggregate claims. But if claims are lower than expected, the employer could get a percentage of their funds back.
Aetna Funding Advantage is a great option for smaller businesses who want the flexibility and savings of self-funded health insurance without the risk of high-cost claims affecting their bottom line.
Interested in Aetna Funding Advantage (AFA) for your business?
Aetna Funding Advantage (AFA) is a great option for small businesses throughout the Northern Nevada region. However, it’s far from the only option. If you want to learn more about AFA, or any of the other group health insurance options for your business, reach out to a Health Benefits Associates advisor at 775-828-1216. Our experts understand the complexities of the health insurance market in Nevada and will walk you through the options to find the solution that best works for your unique business. Contact us today.
