Affordable Small Business Health Insurance
What is a Self-funded health plan?
A self-funded health plan is a way for small businesses to offset the rising costs of healthcare. Small businesses who employ a healthy workforce can take advantage of discounted health insurance premiums while still maintaining the predictable costs and financial protection of fully insured health plan.
- Discounted Premiums. Self-funded health plans can save up to 25% or more when compared to the cost of fully insured plans. Self-funded plans are permitted to medically underwrite the health risks of your employees and pass on discounted rates. If your group is generally younger and healthy this may be a great way to save on your monthly health insurance costs.
- Financial Protection. A self-funded health plan protects your company with stop loss protection, so even if your medical claims are higher than expected you will never be required to pay anything other than your monthly health insurance premiums - just like fully insured health insurance plans.
- Return of Surplus Premiums. Part of your monthly health insurance premiums with a self-funded plan are set aside to pay for expected claims. If your actual medical claims are less than predicted then you have the opportunity to receive a percentage (usually 50%) of your surplus when you renew your policy.
Traditional Funding
Subject to state mandates
No money back
Financial protection
Community rated
VS
Self-Funding
Generally not subject to mandates
Opportunity to get money back
Financial protection
Monthly costs reflect expected claims
Is Self-funding Right for your Company?
Typically, self funding has been used by large companies to control benefit costs. Now self-funded plans can be offered to companies with two or more enrolled employees.
- It's a win-win. With self funded plans you get money back in years where your medical costs are less than anticipated. If medical costs are higher than anticipated, your protected with stop-loss insurance.
- What your premiums are funding. With a self-funded health plan your monthly premium is separated to pay for different healthcare categories. Stop-loss insurance is provided to protect against high claims either from one individual, or the group as a whole. Administration of your health plan is another fixed cost. A portion of your premium is set aside to pay expected medical claims based on the number of insured members in your group health plan and any predetermined health risks.
- Ability to offer multiple plan designs. Your employees are different in their healthcare needs and expectations. Self-funded carriers typically allow at least two and/or up to four different health plan designs. Offer a low cost high deductible health plan for affordability along with a more benefit rich - lower deductible health plan with more manageable out of pocket expenses. By offering a choice, your employees will have a greater say in what their benefits look like, while the employer can set their employer premium contribution amount to keep benefit costs consistent.
