HEALTH BENEFIT PLANS
Easing The Transition From Fully Insured To Partially Self-Funded Health Benefit Plans
BY: BOB PACE
Historically for many small- to mid-sized companies, there was only one type of benefits plan available: fully insured, where the insurance company assumed the risk in exchange for co-pays and premiums. When people, even C-suite executives, think about how insurance would probably work, this is the primary option that comes to mind. Fortunately, there are new options.
More and more solutions are coming into the market, allowing many companies, even some with as few as 25 employees, to take advantage of partially self-funded plans. The difference between fully insured and partially self-funded plans doesn’ t end at the allocation of risk either. Partially selffunded plans provide a way for companies to receive tangible— and in some cases significant— cost savings, better benefits and a slew of tools that they can use to improve their offerings to employees and attract new talent.
Here are the three biggest benefits to a selffunded plan over a fixed cost plan:
1. Transparency – Being treated more as a partner than a customer allows for much more transparency when it comes to metrics and claims data.
2. Cost Effective – Most of the benefit spend( 75 %– 85 %) is variable and remains with the employer if it is not spent on claims. This removes a lot of the overhead and cost that fully insured plans impose.
3. Plan Control – The tools available to self-funded employers are lightyears ahead of what would be available to employers in a fixed cost plan. This allows for better quality of service and significantly higher claims savings.
With a self-funded plan, a toolbox opens up which allows a slew of savings options for the company while still providing the quality of care that employees need. Among the most useful tools are the following:
• Biometric Screening – This tool involves a short series of questions and tests, including a 49-panel blood test, which can be used to help identify risk factors and serious health problems in advance. Being proactive is always better than being reactive when it comes to health, and this is a tool which can help employees be proactive. For the business itself, catching even one or two cases of cancer or diabetes early and turning them around with positive results is a massive cost savings over time.
• Rx Carve Out – The lion’ s share of cost increases, in terms of insurance, comes from pharmaceutical companies pushing name brand and specialty drugs on doctors and insurance companies. Rebates from these pharmaceutical companies are offered as an enticement to fully insured carriers. With self-funded plans, rebates are returned to the employers, including the data metrics behind the numbers.
• Concierge Services – By using a phone app or making a phone call, an insured individual can find out the best place to go for treatment. Quality, price and access can vary widely even within 15 miles of a patient’ s location. If individuals take advantage of this particular concierge service, they can assure that they are utilizing their health benefits most effectively. Member deductibles, co-pays and quality care can be better utilized through these real-time health benefit concierge services.
The above list is by no means exhaustive. There are numerous other tools that can assist in lowering your healthcare spend. Ultimately, the point is that by transitioning to a partially self-funded plan, companies open themselves up to solutions which better fit their needs and, often, their checkbooks as well.
Ninety-eight percent of companies in the United States that have 1,000 or more employees are self-funded. That’ s because it’ s the most cost-effective way to provide health benefits to employees. If Fortune 500 companies are self-funded, why shouldn’ t your company have the same advantages? That’ s what partially selffunding with a stop-loss captive can do for you and your company. +
Roundstone( see @ CaptiveInsurer or RoundstoneInsurance. com) has a solution which can fit companies with as few as twenty-five employees. The law of large numbers allows you to mitigate your risk and be treated like an employer with many thousands of employees. Give us a call at 440-617-0333 or contact us at info @ roundstoneinsurance. com to find out how you can start making the transition and saving money today.
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