Employee healthcare insurance is both complex and pricy. That’s nothing new. But there’s a new trend in employer sponsored plans that’s actually lowering the cost of healthcare insurance—for some by tens of thousands of dollars.
Self-funded insurance plans are a new way for businesses to provide their employees with top-level healthcare at far more affordable rates.
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Traditional Employer-Sponsored Insurance vs. Self-funded Insurance
In a traditional employer-sponsored healthcare insurance plan, both the employer and employee pay monthly premiums. Employees choose plans based on their financial and healthcare needs, which means some things are covered and some aren’t. On top of that, employees often have to pay deductibles before their insurance kicks in, and that can often be thousands of dollars.
In a self Funded insurance plan, employers assume direct responsibility for the cost of the enrollee’s medical claims. So instead of sending premium payments to an insurance company, they pay for medical expenses out of pocket.
While on the surface that might sound more expensive, there are a number of benefits of self-insurance plans, including potentially saving tens of thousands of dollars each year. Plus with the additions of Stop Loss insurance, it caps the amount an employer would pay in claims. This eliminates the financial risk that could financially hurt an employer.
Top Reasons Why Self-Funded Insurance Could Be Right for You
There are several benefits both employees and employers receive from a self-funded insurance plan. These include:
✓ Lower cost insurance premiums ✓ Lower healthcare costs for employees ✓ Potential cash back at the end of the year ✓ Complete customization of benefits ✓ Customizable stop-loss insurance to reduce risks
Hear what other small business owners have to say
Bill had suggested self-insurance to me several times. I was reluctant to explore it because I believed there would be unmitigated risk. Then I got frustrated last year with our insurance company due to poor service, increased insurance premiums, and reduced benefits, and I decided to explore self-insurance. Once you understand the concept, it is a no-brainer. In short, self-insurance premiums are less; the benefits are more; the service is better than that of Anthem, Aetna or United Healthcare; and there may be a refund check at year end.
Approximately a year and a half ago Bill Schmidt approached us with an innovative method of operating a health benefits program for our employees which combined the purchasing power of a consortium, the billing scrutiny of a private buyer, and the value of some self-insurance, with back-stop insurance in case of catastrophes. It’s been an unqualified success for us. We saved more than 25% over conventional insurance, the customer service has been excellent, and we’ve had no complaints from employees over the quality of coverage.
Healthy Buildings Intl.
… this year we received a favorable renewal, but we decided to try the Self-Funding route and we were able to save off that renewal. Plus, with the potential money left in the claims fund at year end, the savings could be bigger.