Self Funding 101

One of my absolute favorite things to do as an employee benefits consultant is to help employers determine if self-funding is a right fit for their organization.?Self-funding can be a scary concept when it comes to your organization’s health care.?Over the course of 5 years, most organizations have between a 90 - 100% chance of saving money if they’re working with a firm that knows how to actively manage the plan.

At USI, we will do a 2 year look back and a five year look ahead to see if self-funding is a viable solution for your group.?It is important to have a strategy for first three-five years of going self-funded.?There are two types of insurances you will purchase when you go self-funded:?1)?specific - for any one particular person over a 12 month period?2) aggregate - which is your umbrella policy for all your claims for the coming year (usually set at 125% of expected claims.)?Typically, you will pay your stop loss insurance and administrative costs monthly and pay your claims weekly.?Many groups large and small are also looking at options that are safer methods of self-funding like medical captives.

Our local employers in Western and Central PA remain committed to providing employees benefits and managing costs.?Most employers do not expect health care reform to lower costs, however, most employers are increasing their employee’s share.?Most employers pass cost to employees in the form of increased deductibles, co-pays, coinsurance or higher premiums.?Price transparency and consumerism continue to grow.?Members are now able to see that hospital charges vary widely.??Direct primary care with companies like People One Health is a great option to help provide employees and their families with great care while decreasing cost to the employer.

If you offer multiple plans, guide your employees to make better decisions (either through an on-line platform or meetings during open enrollment).?Also, you may want to implement a health and wellness program.?This is tricky because the measurable return on investment is not easy, but there are still some ways to attack health and wellness that will tremendously impact your employee satisfaction and overall health and well being in a positive way.?Once you go self-funded, you will have access to your data and can implement a true population health strategy.?At USI, we help our clients build an incentive plan that encourages employees & their families to engage with a primary care physician, get their annual preventive screenings and also some incent folks to receive a yearly biometric screening.?These key actions have a measurable impact on cost as well as help to keep your employees & their families healthy.

Healthcare per Warren Buffet is a hungry tapeworm feasting on the US economy – 18% of what Americans spend each year is on health care, with 20% of it being unnecessary.?Every year employers want to keep cost down and increase or maintain the same level of benefits for employees and their families.?We try quick fix/band aid solutions.?We are all part of the problem.?Cost continues to be the #1 issue with no end in sight.?Carriers will continue to consolidate,?providing less options, shrinking access and increasing prescription drug cost.?And now, there is a new COVID load that carriers are baking in to fully insured renewals, so, you MUST have a multi-year strategy whether you are self-funded or fully insured.