House members this week opened hearings that could lead to recommendations for small businesses to self-fund health benefits.
Chris Collins (R-N.Y.), chairman of the health subcommittee of the House Committee on Small Business, convened the panel to receive testimony from industry representatives and researchers, saying afterward he would seek to advance self-funding recommendations from Congress.
“I certainly would encourage companies in deciding to kick off [self-funding] on April 1,” Collins said, while repeating his understanding that self-funding doesn’t work for every small company but can help many.
Insurance agent Robin Frick, who focuses on self-funding at Combined Benefits Administrators in Madisonville, La., testified for the National Association of Health Underwriters on Thursday.
“I think they now have a better understanding” of self-funding,” the past president of Louisiana Association of Health Underwriters told EBA after the hearing. Frick anticipates the hearing might “lead to further discussion of [whether] alternate-funding mechanisms besides fully insured would be appropriate for the small business market.”
Another witness, Linda Blumberg of the Urban Institute, asserted that ACA regulations do not apply to self-insured plans so more regulation of those plans is necessary. She said small-business interest in the option has increased with the ACA and, as published in her November 2012 issue brief on the subject, would, “avoid broader sharing of health care risk, isolating higher-cost groups in the fully insured market … [leading] to higher premiums in the fully insured small-group market.”
Frick, however, sees no need for further regulation, noting that ERISA and Labor Department regulate self-funded groups at the federal level. Another witness, a chief executive officer of a 160-employee company, testified to the value of the arrangement saying that he chose self-funding after his group’s fully funded premiums skyrocketed in 2007.
Collins asked several times for a bottom-line answer from the witnesses about the smallest number of employees a small business should have for self-funding to be viable. “The appropriateness of a self-funding arrangement is not determined by the particular size of any business,” Frick said, adding that finances and demographics add to the consideration of any employee benefits professional in recommending this option. Frick and Self-Insurance Institute of America President and CEO Michael Ferguson also discussed the necessity of a solid third-party administrator and pharmacy benefit manager in order to ensure the success of self-funding for any group, large or small.
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