Self-insured health plans have become an increasingly attractive way for organizations of all sizes to better manage benefits costs while offering employees a plan that best suits their needs.
Once strictly a big business strategy, today, smaller organizations are realizing that self-insured health plans are an attractive benefits cost management strategy. Self-insurance improves flexibility in tailoring and administering employee benefit programs to meet the needs of today’s diverse workforce. The approach also helps plan sponsors avoid costly required state insurance provisions. Savings are the real attraction – as much as nine percent annually.
Transitioning to a self-funded benefits model isn’t for every organization. It can be administratively cumbersome or stress available cash in some organizations. Is your organization ready to make the move? Here are eight characteristics of those that are:
- Your claims experience has been reasonable and stable over multiple years, even as your employee headcount has grown. This stability means you can effectively predict future claims and plan your funding to smooth out any cash flow variance.
- You understand the tradeoffs between non-claims expenses (think state premium taxes, administrative fees and insurance company profits) and claims risks and administrative responsibilities. You are comfortable managing these responsibilities and understand that your organization has an appetite for risk.
- You see the cash flow advantages of self-funding as not merely attractive, but very much in line with your overall financial objectives.
- You want greater control over key management aspects of your benefits program, full ownership of your claims and better accountability from your vendors.
- Your finance and human resources teams are ready to partner with your broker to manage the various aspects of self-funding including managing routine financial and plan administration requirements, reviewing and analyzing plan performance to ensure claims and other costs are on track, and getting the most out of your Third Party Administrators, stop loss carriers, and Pharmacy Benefits Managers.
- Staff is available and either trained or is able to be trained in expanded HIPAA compliance.
- Your broker is well-versed in helping companies of your size transition to self-funding and has preferred arrangements with stop loss carriers, TPAs and other partners.
Once you’ve gauged your readiness, the next step is to put an action plan in place. Your broker should use demographic and claims analyses to project costs. Coupled with a “future proof” plan so it doesn’t need to be tweaked every year, you’ll be able to fully realize the benefits of self-funding.
Contact a HUB benefits consultant to discuss your readiness and to better understand both the risks and rewards of self-insured health plans for your employees.