Self-Funding: A Refreshing Alternative That Makes Sense
With increased regulations, many employers may feel that they have diminished control when it comes to their health plan. In addition, it’s easy to feel overwhelmed by the rising costs of health insurance. Employers are often stuck in the middle – they care about their employees’ wellbeing, and want to provide them with affordable, high-quality insurance, yet the increased expenses and regulations are making it more difficult to do so.
The good news? Employers have an alternative. Many employers are discovering the advantages of alternative funding options not previously available from level funding to partially self insuring.
Self-Funded vs. Fully-Insured
In a traditional Fully-Insured plan, employers pay a pre-determined premium to an insurance carrier, based on number of employees enrolled. Premium rates are set by the carrier, and are typically high. In this model, employers overpay to cover potential claim expenses, regardless of if they occur. Rates are fixed and tend to increase each year.
In a Self-Funded (or Self-Insured) plan, the employer pays for claims as they are presented; only paying for claims that occur. Built-in safeguards protect against catastrophic loss. There are many advantages involved with Self-Funding, but a major benefit is lower cost, due to greater transparency. Employers exercise control over their overall health plan, which helps keep costs down, yet allows exceptional protection for employees and their families when it comes to medical coverage. Self-Funding has been proven over the years. It is one of the most effective ways employers can control the rising costs of health insurance.
Thomas McGee, L.C. has been Self-Funded for over 20 years, and we’re extremely satisfied with the results. The increased control we have over the plan allows us to continually refine our strategies and services to the latest, most cost-effective techniques available. This means our company saves money on premiums, and we’re able to pass the savings onto our employees, while everyone reaps the benefits of a top notch health plan.
Success with Self-Funded plans is widespread. It’s been proven. Over time, companies with Self-Funded plans save more on average than those who are Fully-Insured.
Considering switching to Self Funding?
Experts provide insider advice for employers contemplating this opportunity: Look into this option sooner than later. Because Self-Funded cost parameters are determined largely by your current premiums, it can be a huge benefit to switch to this type of plan prior to your renewal, before costs are likely to increase.
The only way to know if your business could benefit from Self-Funding is to analyze your existing plan design and recent claims experience. Our team of Self-Funding experts will review your options, determine if Self-Funding makes sense for your organization, and help you build a plan.