For decades, employers determined to get a handle on runaway health care costs have compared self-funding to their traditional fully insured plans. Many who have made the move have discovered that the opportunity for savings is just one advantage. Others include flexibility in plan design, access to plan and utilization data and the ability to use that data to influence employee health for the better.
Plan Design Flexibility
Having control over the design of your employee health benefit plan is huge – especially in light of the Affordable Care Act (ACA) and the costly benefit mandates that came with it. Partially self-funded health plans, those with stop-loss coverage to cap claim costs, are subject to federal ERISA laws, thereby avoiding state regulations and some ACA provisions. Best of all, programs can be designed to meet the needs of your population and evolve as needs change.
With a self-funded health benefit plan, your company pays only for fixed expenses like administrative fees and stop-loss insurance premiums and claims that your covered group incurs. Profit margins, risk charges, reserves and most state premium taxes, common to fully insured plans, are avoided.
Access to Claims Data
Access to plan and utilization data enables a self-funded plan to modify far more than contribution levels. Data analysis can help identify factors driving claims. Those with chronic conditions can get the help they need when they need it. Worksite wellness measures can be designed for greater impact and costly health issues that do arise can be addressed earlier.
Just like the many aspects of our lives that can now be customized at the click of a button, the days of one-size-fits-all health insurance plans are gone forever. Subject to state regulations, an increasing number of employers of 25 or more will discover that flexibility and control in health benefits will belong to those organizations that work with an independent third party administrator to adopt partial self-funding.