How can you contain your healthcare costs without cutting your employees’ benefits?
The average family premium has increased 20% since 2017. This rise in healthcare costs is putting a significant financial strain on both individuals and businesses, making it more important than ever for you to explore innovative solutions that can mitigate the impact of soaring healthcare costs.
Self-funding health plans have been gaining momentum. They allow you to take control of healthcare costs and provide customized benefits to fit your company’s unique needs. By embracing self-funding, you have the potential to revolutionize your employee benefits and unlock a range of advantages that can lead to greater financial stability, improved flexibility, and enhanced employee satisfaction.
In this blog, we’ll dive into the world of self-funding and uncover the advantages it offers employers, the benefits it brings to employees, and the steps you can take for a successful transition.
UNDERSTANDING SELF-FUNDING HEALTH PLANS
In a traditional fully-insured plan, you are contracted with an insurance carrier, paying predetermined premiums to transfer the financial risk of healthcare expenses to the insurer. The carrier assumes responsibility for paying your employees’ medical claims.
Conversely, with a self-funded plan, you would directly assume the financial risk of providing healthcare benefits to your employees. Rather than paying a fixed premium to an insurance company each month, you would set aside funds to cover the anticipated healthcare costs of your workforce.
You have full responsibility for paying employees’ medical claims as they arise—this can be done with your own funds or with the assistance of a third-party administrator (TPA).
This may all sound scarier than it is, but don’t let that steer you away from a self-funded plan. When mapped out and implemented correctly, there are many benefits to both the employer and employee.
BENEFITS FOR EMPLOYERS
Self-funding plans offer several benefits for employer groups. Here are some key advantages:
Cost Control and Flexibility
Self-funding plans allow you to gain control over your healthcare costs. Instead of paying monthly fixed premiums to an insurance carrier, you will only pay for the actual healthcare services used by your employees. Unlike fully-insured plans, any unused funds at the end of the plan year can be retained and saved or reinvested into other employee initiatives.
Plan Customization
Design and customize your health plans to meet the specific needs of your employee population. You can offer a wider range of network options, allowing your employees to access high performing doctors. Self-funding also allows you to have control over the design and management of prescription drug formularies.
Self-funding allows you to add supplemental benefits and services to employees’ health plans. This can include vision and dental coverage, telemedicine services, employee assistance programs (EAPs), fertility treatments, alternative therapies, and more. Your organization has the flexibility to include benefits that are meaningful and valuable to your employees.
Robust Data Insights
Gain access to detailed claims data, which provides valuable insights into employee health utilization patterns, top cost drivers, and areas where you can take actionable measures to optimize care and manage costs. Your data can help you make informed strategic decisions and fill gaps to better understand your employees’ healthcare needs.
BENEFITS FOR EMPLOYEES
Not only will your organization benefit from a self-funding plan, but your employees will too. Here are some key advantages for your employees:
Enhanced Coverage
Your employees will gain access to a broader range of coverage options, networks, and additional benefits. You will be able to offer your employees specialized services tailored to address their needs.
Quality of Care
Self-funding plans often provide employees with access to preferred provider networks, allowing them to receive care from a network of healthcare providers that have been carefully selected for quality and cost-effectiveness. This can help ensure continuity of care and ongoing relationships with trusted healthcare professionals.
Financial Savings
Self-funding plans can offer cost savings to your employees in the form of lower premiums, reduced cost-sharing, or access to employer-funded health reimbursement arrangements (HRAs) or flexible spending accounts (FSAs). These financial benefits can help alleviate the financial burden of healthcare expenses for your employees and their families.
HOW TO GET STARTED WITH A SELF-FUNDING HEALTH PLAN
Getting started with a self-funding plan takes careful consideration and planning. There are many details to consider, and it can seem overwhelming. The best place to start is with a benefits consultant.
A self-funding expert will start with an evaluation of your organization’s current financial stability and risk tolerance. They will work with you to take a deep dive into your benefits analytics and determine if your employee population is suitable for a self-funded plan.
Your broker should also be available to educate and gain buy-in from your business’ key stakeholders, providing education and data-driven insights to support the transition. By highlighting the financial advantages and long-term cost savings, your team will be able to make an informed decision.
WORK WITH OUR SELF-FUNDING EXPERTS
It is important to understand the financial risks and benefits of a self-funding plan and the best place to start is with a trusted benefits advisor, like Ascela.
Our team of experts can do a full evaluation to determine if a self-funded health plan is right for you—contact our team today.