Compliance Q&A: Best Practices for Level-Funded Plan Compliance

Often considered a hybrid approach, level-funded plans provide the stability of fixed premiums (similar to fully-insured plans) along with the ability to share in a degree of cost savings (a feature of self-funded plans). However, it is essential to understand that level-funded plans are generally considered self-funded plans for compliance purposes, including under ERISA, HIPAA and the ACA. This means that employers who sponsor level-funded plans generally take on more robust compliance responsibilities than they previously had when fully-insured. Enjoy the benefits of the level-funding approach but do your due diligence and don’t be caught in one of the many traps for the unwary!