Self-Funding Option in Canal Fulton, OH, Canton, OH, North Canton, OH, Massillon, OH and the Surrounding Areas.
As health care costs continue to climb, employers are actively looking for ways to manage these costs effectively. While some may change health plans and increase cost-sharing methods, others opt to change their plan design from a traditional, fully insured plan to a self-insured plan.
It’s important to note that self-insuring is not right for every organization. If you’re considering switching to a self-insured health plan, you should analyze the advantages and disadvantages before making the switch.
Distefano Insurance Services, Inc. is your guide to determining which plan-funding mechanism will best suit the needs of your employees and your bottom line. Contact us today at 330.854.6637 to get started.
What Are Self-insured Health Plans?
A self-insured health plan is one in which the employer assumes the financial risk associated with providing health care benefits to its employees. Rather than paying fixed premiums to an insurance company in exchange for claims assistance, the employer pays for medical claims out of pocket as they arise with a self-insured plan.
A self-insured health plan enables employers to operate their own health plan instead of purchasing a fully insured plan from an insurance carrier. Employers choose to self-insure partly because it allows them to save the profit margin that an insurance company adds to its premium for a fully insured plan. However, self-insuring can expose the company to a much larger risk if more claims than expected must be paid. With a self-insured health plan, there are two main costs to consider: fixed costs and variable costs.
The fixed costs include administrative fees, any stop-loss premiums and any other set fees charged per employee. These costs are generally billed monthly by the third-party administrator (TPA) or carrier handling plan administration, and they are charged based on plan enrollment.
The variable costs include payment of health care claims. These costs vary from month to month based on health care use by covered persons (i.e., employees and dependents).
To limit risk, some employers use stop-loss or excess-loss insurance, which protects them against claims that exceed a predetermined level. This coverage can be purchased to cover catastrophic claims on one covered person (specific coverage) or to cover claims that significantly exceed the expected level for the group of covered persons (aggregate coverage).
Self-insured vs. Fully Insured Health Plan Characteristics
Review the chart below to understand the main differences between these two types of plan designs.
Which Is Right for You?
Determining whether a self-insured plan is right for you can be a daunting task. Fortunately, we’re here to help. Contact Distefano Insurance Services, Inc. today so that we can help you evaluate your employee benefits needs and find the health insurance solution that’s right for you and your employees.