The views of this article are the perspective of the author and may not be reflective of Confessions of the Professions.
Health insurance premiums in the US have been rising steadily in the past five decades. As a result, both SMEs and large organizations are considering self-fund medical benefits. Here is why you should talk to your employer about self-funded health plans.
With self-funding, your employer will be responsible for all the financial risk. It differs from a fully-funded health plan where the insurer covers the risk in exchange for the organization’s premium. While it may seem frightening to take all the risks, the employer gains more flexibility over the process. Self-funding allows employers to monitor and coordinate the health plan’s vendors. That way, the organization can develop the best health plan for its employees. Furthermore, the organization can create stop-control measures to mitigate the risk. Therefore, your employer can decide how much risk they can handle.
Self-funding facilitates transparency by providing employers with details regarding the health plan. Access to data enables the organization to track trends and improve the healthcare cover for its employees. A fully-funded plan often relies on a single network with limited access to healthcare services and providers. But with self-funding, the employer can adjust the plan based on staff feedback and market trends.
Self-funding offers flexible options instead of including vendors and providers in one plan. An employer can access data and analytics through a customized plan. Every year, the organization can utilize reporting and analytics to facilitate decision-making. For example, your employer may use the data from a platform like HealthEZ to determine what to exclude from the health plan. The funds can be channeled to other benefits that are relevant for employees. A better health plan means a healthier workforce and a boost in productivity for the organization.
Self-funding is often more affordable than traditional health plans for two reasons. First, the expenses do not include profit margins to help insurers cover their risks. Secondly, it does not include state-levied taxes, resulting in lower costs. Your employer also has control over the health care premiums. When the claims are less than expected, your employer can retain the funds. The organization stands to benefit from an increase in cash flow.
It is still possible for the organization to lose all the funds through a self-funding health plan. That’s why it’s critical to implement a stop-loss measure to minimize the risk. An effective stop-loss strategy will allow your employer to regain control of the insurance cover.
About the Author
Lizzie Weakley is a freelance writer from Columbus, Ohio. In her free time, she enjoys the outdoors and walks in the park with her husky, Snowball.