Self-insured health plans or self-funded employee health insurance plans are risky for companies to offer, but they are incredibly common. This employer-operated health care plan requires businesses to calculate the number of claims they expect to pay monthly. Sound impossible? It can feel that way sometimes, especially when some months cost far more than average. However, self-funded employee health insurance can also offer money-saving options.
Employer Responsibilities in a Self-Insured Employee Health Plan
When your company operates a self-insured health plan, you can expect the following:
- The profit margin that is usually added to an insurance company's fully-insured premium is eliminated.
- There will be fixed costs, like stop-loss premiums and administrative fees.
- There will be variable costs, like the payment of monthly health care claims.
- The option to select stop-loss or excess-loss insurance to protect claims that go over a predetermined amount.
- Opportunities to vary the plan, such as with a partially self-insured health plan with an integrated health reimbursement arrangement (HRA), or a self-insured reimbursement plan.
Benefits of Self-Insured Employee Health Insurance Plans
While there is inherent risk for a company with a self-funded employee health insurance plan, there can also be great rewards, and great opportunities. Insurance plans can be customized to meet the needs of your business. This is one of the reasons that small businesses are increasingly being drawn to self-funded plans. Plus, there are potentially lower costs for both your company and your employees, and you have greater control over the type of coverage you offer to your employees.
Over time, a self-funded plan can save you money. Budgeting for a certain number of claims every month can be a tricky task, but over-budgeting and having claims come in at a lower rate can give companies a surplus of funds. These excess dollars can be rolled back into your health plan and invested in other benefits for employees, such as encouraging wellness among employees by providing opportunities to stay healthy.
If you want to keep health insurance costs down, you need to keep employees healthy. Providing nutritious meal plans, gym memberships, in-office yoga or meditation classes, on-site fitness equipment, or even peaceful napping areas may sound pricey and indulgent but, in the long run, these efforts can help employees maintain better health, improve productivity, and minimize health insurance costs.
How a Self-Funded Employee Health Plan Works
In the traditional world of self-funded plans, a company pays for its own medical claims directly. There is help to be had though. A third-party administrator can process the claims, issue ID cards, and perform the functions of a health plan to save your human resources or accounting departments from being responsible for tasks beyond the scope of their job description.
Of course, when dealing with healthcare, it is important to remember that special situations will arise. An employee will develop a chronic condition, someone will be diagnosed with cancer, or an accident will require many doctor and specialist visits. It is illegal to discriminate against employees for medical reasons, but companies must keep in mind that the unexpected must be planned for in the self-funded employee health insurance realm. Purchasing stop-loss insurance, however, can protect you from being saddled with exorbitant fees.
Is a Self-Funded Employee Health Insurance Plan Right for Your Company?
Ultimately, self-funded employee health insurance plans are a way to control health care costs while maintaining coverage for your employees. Understanding the particulars of what's involved, what your responsibilities are, and what will be required of employees can be confusing.
Talk with a representative from The Benefits Group about self-funded plans, the pros and cons, and whether it is the right option for your business. By discussing your employee needs, demographics, and business cash flow, we can make the recommendations that will help you decide whether self-insuring is a viable option for your company. Contact us to schedule a consultation.