If you’re still on the fence about whether or not you should self-fund the employee benefits plan for your small-to-mid-sized company, here are a few more reasons that should make that decision a little easier.
Access to Claims Data
Why is claims data so important? Because with it you can identify your biggest cost drivers. You can’t fix what you don’t know is broken, and claims data can be hard to come by when dealing with fully insured programs. TPAs who administer self-funded plans have access to all kinds of plan data in all kinds of formats – data they can use to identify areas where things like prevention, health promotions, disease management and plan modification can be used to manage plan costs now and potentially reduce future exposure.
An example of using plan data to best advantage is the creation of incentive-based provider programs. Claims data can help indicate which plan providers are delivering high quality treatment at lower costs with better outcomes – allowing you to create incentives that encourage plan members to utilize these providers over less effective hospitals and physicians.
Firms with less than 250 employees can take advantage of favorable incentives in the Affordable Care Act (ACA), which exempt self-insured plans from a number of the requirements imposed on fully insured programs. For example, insurance plans are required to include an “essential health benefits” package – rules for this package are relaxed for self-insured plans as applied to the definition of what constitutes coverage for things like doctor’s visits and outpatient services, emergency visits, hospitalization, maternity and newborn care and more.
Plan Control and Customization
Self-funding allows plans to be tailored to the needs of the specific workforce. The employer controls the health plan and the services provided, and has the freedom to contract with any provider or provider network. This combination of data access, ACA considerations and plan control give self-funded plans a higher probability of reducing overall employee health benefit expense.
Greater Access to Plan Protection
The safeguard for an employer with a self-funded plan is stop-loss insurance or reinsurance. Specific reinsurance sets liability limits for any single catastrophic claim, while aggregate reinsurance coverage sets a cap on potential financial risk for the overall plan. Previously high deductible limits have been reduced considerably in recent months to allow even small employer groups access to affordable reinsurance coverage as part of a self-funded strategy.
These are just some of the reasons to consider implementing a self-funded program for your employer group. Your local third party administrator can provide more information on the potential benefits and cost savings.