SELF FUNDING HEALTHCARE

What are the Benefits?

Self-insured healthcare plans are a viable alternative to other health insurance plans. They are increasing in popularity. Rather than paying a predetermined premium to an insurance carrier for a fully-insured plan, self-insured employers can pay for their claims as they are presented and out-of-pocket. Businesses may also negotiate administrative services and reinsurance better and more effectively than a larger, single employer. 

The Trouble with Fully-Insured Healthcare Insurance Plans

Fully-insured health care plans are burdened with disadvantages, some of which include:

  • A lack of transparency
  • Carrier shopping (switching different insurance carriers every year, supplying new cards, etc.)
  • Volatile rating cycles
  • Retrospective rating
  • A lack of direct savings from wellness initiatives 

Facts and Benefits of Self-Insured Plans

Self-insured plans provide alternatives to the traditional rigidness of fully-insured plans from large healthcare insurance conglomerates. Self-insured plans offer greater flexibility and provide some of the following benefits:

  • Availability to small employers with a minimum number of employees covered on their medical plan. 
  • Full transparency—detailed monthly reports show where every dollar is spent on administration, claims, insurance protection, and more.
  • Members can be made fully aware of rate development for their next renewal cycle. 
  • Total control—self-insured plans offer the collective purchase power of stop-loss insurance.
  • Specific claim utilization history, which allows design changes to be made in benefits for both a business and its employees. 
  • Stability—having real-time data throughout the plan year creates a more predictable healthcare plan. In both good and bad claim years, it allows for a safety net of protection.

What is a Healthcare Insurance Consortium?

A healthcare insurance consortium is a group of members—businesses or organizations—that join together to provide healthcare coverage. The groups, or members, participating in the consortium can spread out the costs of administration and can obtain more substantial discounts through volume. A consortium offers the budgeting safety of a fully-insured healthcare plan with the cost-savings of a self-funded plan.

Members of a consortium band together to adopt new strategies and technologies that will lower costs. They use a joint third-party administrator who oversees and ensures that their self-insured plans will reduce fees, and will yield indirect savings.

The consortium model can stabilize costs and cash flow for employee health benefits. Its flexibility makes it possible for small businesses, organizations, and institutions to offer employees a customized benefits program. More organizations are leading the charge to avert healthcare’s rising costs for both consumers and employers. They are adding flexibility to the traditionally rigid m

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