Employers pay for health plans in three common ways: fully insured, level funded or self funded. The difference changes who feels the cost of claims. Employers that pay their own claims, fully or partly, may see the effect of lower claims more directly.
Fully insured
The employer pays a set premium to an insurance company, and the insurer pays the claims. The employer's cost for the year is mostly fixed.
Self funded
The employer pays employees' claims itself. A company called a third-party administrator may handle the paperwork. Stop-loss insurance can cap large claims. When employees use less expensive care, the employer sees it in its own claims costs.
Level funded
A middle path used by many smaller employers. It combines a small self-funded part with stop-loss insurance, which limits the employer's risk.
Why it matters for your pitch
A self-funded or level-funded employer is closer to its own claims, so it may care more about where employees get primary care. A fully insured employer may care more about access and keeping staff. Ask which kind of plan they have early, and shape the conversation around it. This list of first-meeting questions includes it.
Who else is in the room
With a self-funded plan, the employer's broker, its third-party administrator and sometimes a benefits consultant may all have a say. Each one may want to see how DPC fits the plan design. Expect more questions and a longer timeline. How DPC fits with a health savings account also changes with the plan design. Here's an overview.
What it means for your books
Nothing changes in how you record the revenue. Whoever pays you, the employer's payment is employer membership revenue. What can change is who pays the invoice. Sometimes it's the employer, and sometimes the plan or its administrator. Put the payer's name on each contract in your contract list, so payments get matched to the right employer.
What I'd do this week
- Add "type of health plan" to your employer notes template.
- Note which of your current employer clients are self funded or level funded.
- For each contract, write down who pays the invoice.
Common questions
How do I know which type of plan an employer has?
Ask the owner, HR lead or broker. They'll know, and asking shows you understand their side.
Are self-funded employers always better prospects?
Not always. They may be more interested, but more people may be involved in the decision.
Do I need to sign anything with the third-party administrator?
Sometimes. If a plan pays you directly, have your attorney review any agreement before you sign.
Want every contract tracked by who pays it?
We reconcile every account every month and send your P&L and Balance Sheet by the 15th, so decisions like this start from real numbers. If that's what you need, apply to work with us.