With the rising cost of healthcare, large employers are looking for ways to develop better strategies to pay for the healthcare of their employees. While a fully-insured health plan is the traditional choice, more employers are choosing to self-insure in order to create a customized plan and save money.
What is a self-insured health plan?
A self-insured health plan, is where the employer pays for out-of-pocket claims as they are incurred, rather than paying a fixed premium to an insurance carrier. The self-insured employer also assumes the financial risk for providing health care benefits to its employees. With a self-funded or partially self-funded health plan, employers retain the ability to pay their insurance based on the claims that are incurred up to the cap for the individual and cap for the group.
How do I know if a self-insured health plan is right for my company?
A self-insured health plan isn’t right for everyone. It definitely makes sense for some employers (typically companies of 150+ employees) to explore the option. Here are a few things to analyze to determine is a self-funded plan is right for your company:
- Do your claims typically run lower than the premiums you play? Start by looking at your claim experience every year.
- Does your company have a young age demographic? Companies with a younger population typically have better claims and could be a better fit for self-funding.
- Is risk worth the reward? The larger the company, the more it makes sense from a numbers perspective.
Self-funded plans provide data that can help you make plan design decisions and control claims.
Here’s an example: After analyzing your claims, you notice as significant increase in trips to the emergency room. Using that data, you can put together a marketing campaign that urges employees to utilize urgent care or primary care services as an alternative in order to keep your costs down.
Regardless of the route you choose--either a self-funded health care plan or a fully-insured plan--it’s important to weigh all the options and benefits. There is no one-size-fits-all when it comes to health insurance. It’s also important to have an insurance partner you can trust as an unbiased, expert outside party.
If you think a self-insured health plan may be a good fit for your company, we can help complete a detailed analysis and feasibility studies. By utilizing our actuaries, and running your claims data through our actuarial model, we can determine the probability of saving money under a self-funded plan. When you’re ready analyze your company’s health insurance options, reach out to us.
About the Author
Catherine Bishop
Partner and Director of Employee Benefits
Catherine began her insurance career in sales for Great-West Healthcare in 2000 where she specialized in self-funded health plans. She brought her passion for providing healthcare solutions to Catto in 2008. She partners with our clients to understand their needs and provide viable solutions that not only benefit their bottom line but provide security for their employees.