As health insurance costs continue to rise, more businesses are considering self-funding their health plans. Self-funded insurance plans can be a great way to save money on premiums, but it’s not right for every business. Before switching to a self-funded insurance plan, here are a few things to consider.
Do you Have a Good Relationship With Your Current Insurer?
If you’re happy with the service and support you’re getting from your current health insurance provider, switching to a self-funded plan may not make sense. You’ll need to partner with a third-party administrator (TPA) to set up and manage a self-funded plan, and it can be helpful to have a carrier you’re already familiar with to help with that process.
Do you Know Your Company’s Health Care Usage and Costs?
To self-fund your health plan, you’ll need to make regular contributions to a claims fund. The amount you contribute will be based on your employees’ health care usage and claims costs. So, if you don’t know what your employees are using and how much it’s costing you, self-funding may not be the right choice.
Are you Comfortable With More Risk?
You’re taking on more risk with self-funded insurance plans than a traditional fully insured plan, but with the proper reinsurance, your exposure can be limited. If your employees have many health problems or file many claims, you could pay more than you would with an insured plan. On the other hand, if your employees are healthy and don’t use much health care, you could save money by self-funding.
Do you Have the Cash Flow to Fund a Self-Funded Plan?
Self-funding requires you to have enough cash to cover your employees’ health care claims. Self-funding may not be the right choice if your business is tight on cash.
Are you Willing to Invest the Time to Manage a Self-Funded Plan?
Managing self-funded insurance plans takes time and effort. Self-funding requires a bit more work than traditional health insurance providers. You’ll need to work with a TPA to set up the plan and ensure it complies with the law. This work would consume a lot of time, but it may be worth it on costs spent. It could be a great option if you have enough time and interest.
The Best Medical Plan for Your Employees
The self-funding sector is expanding as organizations of all sizes across the United States adopt this plan model to provide group benefits. You should consider several elements when determining whether this structure is appropriate for you and your staff. These encompass everything from financials, risk tolerance, desired health coverage, administrative operations, and compliance resources.
If you’re considering self-funding, take the time to weigh the pros and cons. Larger firms currently gain the most from self-funded insurance plans since they have a larger reserve of funds to address the risks related to self-insuring programs. Because of some stability-induced funds through the ACA, small and medium-sized firms are now also starting to face the risks of self-funding with greater confidence.
Partner with Kirby Employee Benefits
With so many options available in the employee health insurance sector, determining what is best for your company can be difficult. Kirby Employee Benefits can assist you in making these decisions. We are specialists in group health insurance and specialize in keeping the benefits clear and easy to understand.
To get started, we will require a basic census form submitted by your organization and a printout of the current design and pricing. We will then get to work for you, providing a straightforward side-by-side analysis of your options. Because each firm is unique, this comparison will enable us to offer the best solutions for your specific circumstance. Contact us today for more information.