Your company is struggling to pay health insurance premiums. You are looking for a low-cost alternative to traditional medical insurance. Someone suggested a self-funded health plan, but you are not so sure. You talked to your insurance broker and decided self-funding isn’t for you. Here is a suggestion: don’t be so hasty.
Self-funded health plans are worth looking into even if you eventually decide to go in another direction. The thing is that insurance companies and their brokers don’t want you going the self-funded route. If you do, they lose your business. Needless to say, they aren’t going to tell you everything you need to know to make an informed decision.
To prove the point, here are five things that insurers and their brokers will not tell you:
1. Self-Funded Health Plans Can Save Money
Those interested in perpetuating the health insurance model like to claim that self-funded plans are too costly. They like to say that self-funding is more expensive than a fully insured health plan. Don’t believe it. A self-funded plan properly tailored to employer and worker needs can actually save money by containing costs.
Cost containment is a big issue at a time when health insurance premiums consistently grow faster than inflation. A self-funded plan helps to contain costs through flexibility, predictability, and better budgeting.
2. Self-Funded Plans Don’t Have To Be Administered In-House
Many an employer has chosen to forego self-funding based on a misunderstanding that plan administration would have to be handled in-house. That is not the way it works, according to Las Vegas-based StarMed Benefits (employee benefit insurance). As a third-party health plan administrator, StarMed works with companies all over the country to design, manage, and maintain their health plans. They say that companies can administer their health plans in-house if they choose. But if not, third party administrators are abundant.
3. The Risks of Self-Funding Are Minimal
Risk is a big thing for employers wanting to offload increasingly expensive health insurance premiums by opting for a lower cost alternative. Believe it or not, fears that self-funding is too risky are unwarranted. The actual risks are minimal thanks to stop loss insurance.
A well-conceived self-funded health plan includes stop loss insurance that makes up for any shortcomings at the end of the plan year. The cost of the insurance is included in monthly plan payments. Even with the protection, employers have every incentive to overestimate their costs so that stop loss insurance doesn’t have to be utilized. Doing so keeps their costs under control.
4. Self-Funded Plans Can Be Tailored
Self-funded health plans can be tailored to meet workforce needs. Leaner plans can provide minimum essential coverage (MEC) without some of the extras built into fully insured plans, keeping employee costs lower. In addition, certain types of benefits that fully insured plans don’t tend to offer can be included in a self-funded plan. Employers get to choose what they want to include.
5. Self-Funded Plans Are Compliant
Self-funded health plans are compliant with all federal and state regulations. They are compliant with HIPAA, ACA, ERISA, and MEC requirements. As long as an employer works with a reputable third-party administrator, compliance is generally not an issue. They can meet all their legal obligations and still offer a low-cost alternative to traditional health insurance.
If your company is struggling to keep up with rising health insurance premiums, there are alternatives. Don’t dismiss the self-funded health plan simply because your insurance company or broker says it’s a bad idea. Look into it. You might discover that a self-funded health plan is a far better option than sticking with your current health insurance.
