Self-Funded Insurance
What if there was a way to save money on insurance premiums while still offering the same or even better coverage to your employees? Self-funding can be the solution to growing insurance costs.
- Smaller employers now have self-funded plans available to them. This segment of self-funded plans is growing rapidly.
- 47% of employees in firms with 200-999 workers are self-funded according to the 2011 Kaiser Family Foundation Survey of Employer-Sponsored Health Plans.
- Nearly half of large employers use a self-funded insurance solution to their healthcare plan.
Self-funded insurance is an arrangement where an employer provides health care or disability benefits to employees with his or her own money. Even though these plans are called “self-funded” the employer does not usually assume 100% of the risk. Extreme claims like transplants, leukemia or premature births can be covered by a type of insurance called stop-loss or excess-loss which covers the employer for claims above a predetermined price. In other words, the employer accepts most of the risk, but controls that risk with a stop-loss plan.
If you have a number of employees that are young and healthy, it doesn’t make sense to pay a one-size-fits-all premium.
Changing from an insurance program that is the same for every employee to a self-funded plan can make a big difference. Joseph Berardo, Jr., CEO of MagnaCare said in an interview with Inc Magazine, "Savings can be in the range of 10 to 20 percent.”
Sources:
http://www.physicianscare.com/content/public/default.aspx?id=330
http://www.shrm.org/hrdisciplines/benefits/Articles/Pages/SelfFunded.aspx
http://ehbs.kff.org/
