Think your company is too small to self-fund your health insurance plan? Well think again.
I actually have a client that self-funds with only six employees. Granted, the process is somewhat different than it would be for the big guns, like General Electric or American Airlines. But for most companies, it’s a path to better controlling your health care costs and keeping your employees healthier.
A true self-insurance plan does typically require the resources of a very large company, for whom a sudden large healthcare expense – say for cancer treatment – is a drop in the proverbial bucket. A company must pay for all of these expenses out of its own pocket when fully self-insuring, so if a small company were hit this type of hefty bill, the cost would be prohibitive.
That’s why small companies set up self-funded plans together with stop-gap insurance, which fills in the difference between what the company must pay and the actual expenses. There is also a separate component of aggregate stop-loss coverage, which kicks in when the company reaches a total given pay-out amount for all employees. Back-office responsibilities, including enrollments, terminations and claims processing, would still be covered by a third party. However, the company would be able to retain more control over expenses without having to fork over a set amount to an insurance company in the form of monthly premiums.
The good news for employees, is that a self-funded plan – albeit with gap insurance – can help the company structure a customized program that provides effective wellness, preventative health and educational programs to keep employees fit and productive. I call it “turning the dials,” which means developing a plan that has the emphasis where your company needs it most. For example, if you have a company with a high number of diabetic employees, you can “turn up the dial” for diabetes education and prevention programs in order to help folks avoid those claims by becoming healthier, which also makes them more productive at work.
These programs offer additional financial incentives for businesses, including a reduction in state taxes, and greater cash flow and opportunities for investment in your own company. There are also tremendous benefits from being able to obtain comprehensive cost and performance data, which allows you to pinpoint areas of high expense and try to develop and implement cost control programs.
The great thing about working with General Insurance Services on developing a self-funded plan, is that we take a proactive approach with every client, working together collaboratively to ensure that the plan we design is right for you. That means everything from holding monthly or quarterly strategy meetings, to establishing effective milestones and timelines, to helping you develop healthy-living programs for your employees. Through these programs, you have the opportunity to develop a healthy-minded work force that benefits you, your employees and even employees’ families.
This article was published in the Spring 2018 issue of the General Insurance Services Risk & Business Magazine. Access the full publication here.