With prices rising year after year, employers are seeking the latest and most innovative solutions to manage their healthcare costs. Self-funded health plans can provide customization, control, and cost savings. For employers looking for a bit more certainty in monthly budgeting, partially self-funded insurance is a self-funding option that helps put predictability back into the equation, allowing employers to pay a set amount each month. With partially self-funded, any excess payments are refunded, putting money back into your pockets!
Did you know?
According to the 2006 Kaiser Family Foundation Employer Health Benefits Survey, 55% of US companies partially or completely self-funded their health care plans. Of these:
- Companies with 5000 or more workers, 89% self-funded at least part of their health plan
BUT self-funding isn’t just for large companies:
- Nearly 1 in 5 covered workers at small business are either partially or completely self-funded
And smaller to mid-sized companies are beginning to see more and more benefits!
In this webinar you’ll learn:
- How partially self-funding works and how it can help your budgeting
- How to pinpoint what claims are driving the most expense
- Cost saving opportunities with self-funding and partially self-funding
- Why partially self-funding may be the ideal fit for you
Date and Time
Wednesday September 14, 2016 at 2:00 PM (EST)
Who Should Attend?
Human Resources professionals, benefits specialist, CFO’s, CEO’s, and anyone interested in learning more about how partially self-funded insurance options can help manage benefits and healthcare costs for employers.
Employers looking to cut costs are moving away from fully insured plans and moving towards self-funded plans that can offer greater flexibility. With self-funding, the company is responsible for funding claims payments, but the employer experiences fluctuating expenses by paying the claims as they come in. For companies looking to add predictability back into the equation, partially-self funded insurance allows employers to pay a set amount each month.
What are the advantages of partially self-funding?
- Budget friendly: Self-funded plans leave you vulnerable to large fluctuations in claim payments, but partially self-funding will allow you to better manage your budget and keep your cash flow consistent with monthly payments.
- Fixed monthly payments: Each month you will pay the same amount, and if you have a surplus at the end of the year, you will receive a refund. Alternatively, if claims are higher than anticipated, employers can protect themselves with stop-loss insurance.
- Tax advantages: Employers who self-fund are exempt from Employee Retirement Income Security Act (ERISA) rules and are not subject to state health insurance premium taxes, resulting in immediate savings.
- Full access to claims information: Employers can see how claims dollars are being spent! This is a major benefit to employers because they are able to see who is utilizing the plan and where. This data can help employers plan for the next year as well as educate its employees on how to use each service and when. For example, when to use the urgent care as opposed to emergency room to bring down costs.
- Plan flexibility: Partially self-funding provides greater plan flexibility and more control to meet the needs and budget of each employer opposed to a one size fits all fully insured option.
What are the disadvantages of partially self-funding?
- Greater risk: Self-funding and partially self-funding insurance plans place the risk on the employer. In years where employees are healthy and not many claims are placed, employers can see big cost savings, but in a worst-case scenario the risk may be too great for some organizations. Companies can, however, protect themselves with stop-loss insurance.
- Administrative needs: A portion of your monthly payment will need to go towards covering administrative fees. Even with a third-party administrator (TPA), you will also need someone in-house who understands the plan and can work with the TPA to ensure everything runs smoothly.
- Contract terms: Some plans may restrict their offerings to companies with a certain number of employees, so it is important to truly understand the contract terms and determine what will be right for your business.
While partially self-funded plans may raise concerns in certain areas, the potential cost savings, plan flexibility, and budgeting benefits are generally well worth the risk. Larger companies have historically benefited most from self-funded and level-funded plans, but more and more small to mid-sized companies are beginning to see the impact it can have on their organizations. If you’d like to find out if partially self-funded insurance is right for you, Contact Us !
With so many regulatory changes and cost increases year after year, sifting through each and every plan combination to pick the perfect fit for your company can become a daunting task. When renewal season comes around, most employers are seeking the same thing – cost savings. One of the big decisions a company must determine is whether they should choose to be fully insured, or instead, look into self-insured options. More and more companies are looking into self-funded and level-funded plans when looking to save money this renewal season.
Aren’t self-insured plans just for larger companies?
While self-funding has traditionally been a better fit for larger companies with more than 100 employees, smaller companies are now seeing the benefits self-funded health plans can provide, viewing it as a viable option moving forward.
With a self-insured plan, the employer is responsible for paying all of the health care costs plus administration costs, hence taking on more risks. On the other hand, there are several benefits of engaging in a self-funded plan like:
Cost-Savings: Self-funded plans are generally exempt from certain Affordable Care Act (ACA) taxes and other premium taxes, helping to lower the employer costs and increase cash flow.
Control: One of the benefits employers like most is the ability to see where there healthcare dollars are spent and who is spending them. Self-funding allows the employer full access to all claims information, which can help make important decisions moving forward like which plans to choose or how to educate employees on using the right services for them.
Flexibility: Employers can customize plans to fit their employee’s needs rather than buying into a one size fits all insurance policy.
So, what’s level funding?
Level funding is a form of self-funding, but allows the employer to pay a fixed fee each month. This plan is commonly seen as an option somewhere between being fully insured and self-insured. After the employer pays their monthly fees for a year, they are refunded any difference if they have paid more than they have spent. Employers with healthy employees are going to benefit most from these types of plans since there will be fewer and less costly claims.
Alternatively, companies who wish to protect themselves against unpredictable, catastrophic claims can do so with stop-loss insurance. Level funding is a great option for adding predictability back into the equation with a self-funded plan.
If you’re looking to save costs on your healthcare insurance this renewal season, it may be time for a change! Larger corporations have been taking advantage of the freedom self-funded plans can provide for some time now, and smaller companies are increasingly realizing level funding could be a perfect fit. If you’d like to learn more, or see if a self-funded or level funded plan is right for your company, contact our insurance experts today!
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