Theres a lot of discussion about self-funded health plans and new employers are joining the conversation.
In the past, employers with 100 to 150 employees would consider self-funding. Now, those with 50 to 100 workers are mulling it over, says Joe Ellis, senior vice president at CBIZ Benefits and Insurance Services. There is activity down to 50 employees, he says. They are seriously considering self-funding.
Non-profit organizations are considering it, too. Historically, non-profits havent wanted to risk a bad claim year, as they are focused on providing as much money and resources as possible to their mission, Ellis says. Thats changing. The non-profits are saying, I think we can tolerate a certain amount of risk, he says. That was the biggest surprise to me.
Having access to detailed claims reports is one reason most employers with 50 or more employees are looking at self-funding, Ellis says. Annual rate increases under fully insured plans which offer limited reporting leave employers in the dark about whether or not those increases are justified, he says. Ive had employers bang their fists on the table theyre so frustrated. And I dont blame them.
Smaller companies are more like families, Ellis says, and those employers want to take care of their employees. Access to information enables employers to better help their workers with issues like chronic illness, he says. If they dont know, theyre impotent to impact that employee and thats a shame.
Wellness programs can be a big help, as self-funded employers can use that data to identify health risks, says Cathy Kenworthy, CEO of Interactive Health. Knowledge of health risk creates the opportunity to act upon it, she says.
When a populations overall health improves, employees can see instantaneous results, Kenworthy says. Employers can experience immediate impacts of improved employee health on productivity, absences, short-term disability and recordable injuries, she says. The greatest savings and returns come with employer programs that are comprehensive. The right program design works with speed and acts as a catalyst for employees to act on health risks.
Determining if self-funding is a good fit
When discussing options with a client, Ellis looks at three plan designs: fully insured, shared-funded and self-funded. He weighs the effects of various scenarios like risk of a bad claim year compared to rate increases from a carrier.
There is one clear advantage of self-insurance avoiding some taxes. Self-funded plans are not subject to full state premium taxes, and they are exempt from the Affordable Care Acts health insurance providers fee.
Self-insurance also offers more flexibility, but its essential that employers remain compliant with the ACA, Ellis says. Deciding if self-funding is the right option for a client is determined on a case-by-case basis, however, all employers are putting a greater emphasis on their benefits package, he says.
Even if the Supreme Court rules against subsidies in the King v. Burwell case, employers will continue to discuss self-funding as an option, Ellis says. Thats a healthy conversation to have.
