10 Self-funding tips for your client to consider
According to statistics from the Kaiser Family Foundation, 60% of workers covered by group health insurance are in a self-funded plan.
As this percentage is gradually increasing you are probably going to be asked the question “How does self-funding work?”
Here are ten discussion tips you can share with your clients:
1. Risk Tolerance
The concept of self-funding essentially saves enough money to pay for employee medical claims instead of paying premiums to someone else to do the same thing.
Stop-loss insurance, disease management and wellness programs are some of the available services offered to help mitigate financial risks.
2. Cash Flow
The financial aspects of self-funding go well beyond just “paying claims.”
There are many options available through self-funding to help manage cash flow as well as the fact that TPAs are very proactive in using solutions to help maximize dollars.
3. Federal Compliance
Self-funded plans are not governed by state mandates, however, federal laws do have requirements and/or plan designs.
BPA acts as a partner in offering assistance and guidance within these areas, if needed.
4. Plan management
Employers have the responsibility in administering employee health plans.
Many employers however, find it beneficial to hire brokers to assist them with this responsibility.
Either way, there are costs associated with plan management, but effective oversight does lend to saving dollars as well as the employer having a better idea of where claim dollars are spent.
5. Separation of plan from the company
Following HIPAA and protecting the employees’ health information is critical in assuring confidentiality within a health plan management.
A good way to address confidentiality while Management reviews claims data is to redact the information, aggregate the data and limit discussions to minimum necessary information.
Appeal rights and processes are afforded to employees covered by the plan.
A well designed benefit package helps minimize unfair denials and inconsistent decision-making leading to less time addressing appeals and an even greater dollar savings.
7. Internal Plan Competition
Many companies offer multiple health plans to employees.
In situations where self-funded and HMO options are available, your client will need to watch participation in each plan to ensure it does not end up paying penalties to carriers or stop-loss insurers for falling below minimum participation guidelines.
If interested, self-funded plans can be designed for your client to offer more than a one plan design.
As benefits change, employees will need to know what is covered, where to obtain services and how much they are going to pay.
The internal/HR staff needs to be well informed to answer any questions as well as senior management’s answers on the costs and changes of the plan.
Self-funded plans offer many benefits that provide savings to both employer and employees.
9. Plan creation/development/amendment
Reviewing the plan on a regular basis is important to ensure everything is clearly written and current with regulatory requirements.
Updates to the plan are done through amendments sent out by the carrier or Third Party Administrator (TPA).
Reviewing the plan can reduce confusion and unnecessary costs down the road.
10. The participants
Hiring and retaining quality staff is in everyone’s best interest.
Encourage your clients to keep in mind that a well-designed benefit package is part of the overall compensation package and will help them in keeping high-performers.
Overall, for business owners who are interested in saving the most money, a well-run self-insurance plan could be the option.
The key is to develop a comprehensive and fair benefit package for everyone enrolled and remain dedicated to administering it.
BPA is interested in working with you to help your clients be successful in managing their own self-funded plan.