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Level Funding Plan Asset Question


Guest shiramckinlay
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Guest shiramckinlay

I have a client who is an employer participating in a "level funding" welfare benefit plan. This is a self-funded plan. The employer provides a monthly payment to the TPA based on projected claims amounts for the year, and if at the end of the year, there are amounts left over from their participants' claims, the employer will receive a portion of the excess amount.

The payments are kept in the TPA's own account (not the employer's account). Checks to participants are also written from this account. I understand the TPA (a major insurer) has had this type of plan in existence for 8-10 years.

How can this satisfy plan asset requirements? As this is not a fully-insured arrangement, wouldn't a trust be required as soon as the assets were segregated from the general assets of the employer into the TPA's account? What am I missing?

Thank you in advance for any guidance!

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Guest shiramckinlay

Yes, there are employee contributions included in the monthly payments. Participants receive checks for any reimbursement amounts, such as reimbursement for out-of-network benefits.

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