24 Jul Self-Funded Plans: A Solid Option of Small Businesses
Self-funded plans are emerging as an option for small businesses. Below is a summary of an article by United Benefit Advisors. You can view the entire article here.
When the Affordable Care Act (ACA) was enacted, it brought new requirements that prompted many employers to take a second look at what they were paying for employee benefits.
Cost-sharing and cost-shifting are two common ways to cope with overall costs but many small and midsize employers have now taken a look at self-funded healthcare plans. Self-funded healthcare plans used to be considered feasible only for big companies but as the industry has evolved, self-funding has been steadily rising.
Employers assume the risk and cost fluctuations associated with its health care plan, not the insurance company, in a self-funded plan.
Self-funding as a way to stay Nimble
Self-funded plans may be attractive to small employers with healthy groups because plans under the ACA do not give them any credit for having a healthy work population.
Self-funded plans also are more flexible for the employer and offer them more control in the plan design. Employers can bundle different components within their healthcare plans.
Self-funding has recently become an attractive option for all sized groups because it gives them a way to avoid various costs and compliance aspects of healthcare reform. Self-funding offers some relief from mandates and fees associated with ACA.
Using Stop Loss to Manage Risk
Most employers do not assume all the risk associated with self-funded plans. The majority of employers purchase stop loss insurance, also known as reinsurance.
Employers pay the TPA a fixed administration fee per person enrolled in the plan and there are several forms of risk. Medical and pharmacy claims can fluctuate throughout the year. Larger employers will see less fluctuation than smaller employers. Individual large claims can also pose a risk and are usually unexpected.
Doing wellness right
Wellness programs can be important to making a self-funded programs successful but it’s important they be customized to address short-term and long-term goals of the employer.
Implement programs that identify medical conditions early. This can lower the costs of treating those conditions, and help the individuals maintain or lower clinical risk factors and help avoid associated medical claims.
Preventive Care – Getting the Employees Involved
Don’t forget to involve your employees and motivate them to see their primary care physician. Encourage them to have an ongoing relationship with their primary care doctor.
Obtaining stop loss insurance, conducting risk assessments, instituting wellness programs are important when switching to a self-funding program. That’s where an experienced benefit advisor can help. Contact ClearPath Benefit Advisors today.
Download full article here.