The idea of employers self-funding their own health insurance benefits has been a hot topic for years, particularly since the Affordable Care Act became law in 2010 and it became known that self-funding could help employers avoid some of the law’s strict requirements. However, now that the public health insurance exchanges have opened, reality is upon us and Jan. 1 is right around the corner.
Business owners may have flirted with the concept of self-funding in the past, and may have even discussed it with their brokers, but implementation has been notoriously slow. The likely reason behind this is that while business owners are now at a point where they understand the benefits of self-funded health plans, they are still at a loss when it comes to figuring out exactly how to get started.
There are numerous benefits available to employers who choose to self-fund, but it’s not for everyone, and the decision to move in that direction or remain fully insured can be a tough one. This is made even more difficult for employers when they have little or no access to their own unique claims experience. The best thing a broker can do in this situation is to help the client determine if their group would be suited for that type of arrangement. Self-funding is not a “one-size-fits-all” solution and brokers need to be careful not to make any promises when advising clients on this matter. Depending on the group, remaining fully insured could be their best option.
To get an accurate read of an employer’s overall health, and make the determination as to whether or not they would be a good candidate for self-funding, brokers can work with a third-party administrator to distribute personal health questionnaires for completion by all the employees of the specific employer group. The questionnaires cover topics related to medical conditions and treatments and help determine the overall health risk profiles, or mod factors, of this group as well as the health risk profile, or mod factor, of its employees and their dependents. The time commitment is minimal, as they can be completed entirely online, usually within a few weeks.
Once everything has been processed, the third-party administrator will then counsel the broker as to how best to advise its client. Employers with better-than-average risk profiles, or mod factors, will likely be encouraged to make the move to self-funding, while others will be advised to remain fully insured. Regardless of the outcome, the risk profiles, or mod factors, can then serve as a basis for the development of targeted risk management programs — similar to those offered by companies with access to their own claims information
Brokers need to do more than just talk to their clients about self-funding; they need to provide them with the confidence they need before making the leap. PHQs are valuable tools that brokers should have in their arsenal, and using them to determine a client’s health risk profile can make all the difference for brokers when it comes to advising clients on how to move forward with their health care benefits.
Fleet is president of AmWINS Group Benefits, a Charlotte, N.C.-based wholesale broker of comprehensive group insurance programs and administrative services.
