Is It Time to Self-Insure Your Health Plan?

Self-insured health plans traditionally have been more popular with larger companies, with 250 or more employees.  With rising healthcare costs and ACA fees for fully insured plans, self-insured (a.k.a. self-funded, and or partially self-funded) plans are gaining popularity among small and medium-sized businesses.

What many employers like about self-insuring (and related alternative funding options) is access to knowing how the plan is spending. Accessibility to trends, usage, and limited analytical data are also helpful. In addition a self-insured plan is governed by ERISA (Federal laws) as opposed to your state’s laws, offering flexibility in designing your plan, with a uniformity of plan design should you have out-of-state locations.

Moving to a self-insured plan, regardless of your company size, isn’t a decision to take lightly. The rewards can be substantial, but there are risks that need to be considered. Establishing that line which your organization is willing to go up to and realizing where the risk mitigation begins is essential. That’s step one.

Key questions to ask:

  • What are your organization’s main factors to consider before moving to self-insurance (or alternative funding).
    • Current and past 2 years loss ratio
    • Known High Claimant information
    • Appetite for risk 
    • How does this fit with your strategies for mitigating potential risks (not only within the health insurance annual spend, but also your overall business risk)?
    • How aware are you of the best practices for a successful, ongoing self-insured program?
    • How has your health insurance’s internal plan design kept up with the ever-changing ways to finance a plan (i.e., self-insuring, Rx carve-out, Level Funding, etc.)?

The WIT’s health and benefit options through insurance broker OneDigital provide a look at many fully insured health plan options with ‘A Rated’ carriers. Ancillary benefits include: Dental, group Life, Short Term Disability, Long Term Disability, and many other voluntary benefit options. Is your organization a candidate for Self-Insuring? Would Level Funding be a better situation today? These are all possible, and worth taking time to walk through the options. Contact: [email protected] for further discovery, looking at a full continuum of options and funding methods best for your organization.

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