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Waking Up to the Opportunity of Self-Funded Employee Health Benefits
August 24, 2015

Waking Up to the Opportunity of Self-Funded Employee Health Benefits

Self-funded employee health benefits are becoming increasingly prevalent as employers seek ways to reduce healthcare expenses, increase plan flexibility, manage risk, and tailor plans to what their workers really want and need.
Self-funded plans hold down healthcare costs better than fully insured plans. Once an employer has developed its self-funded program, with careful planning and administration, it can expect to realize, on average, a 5% to 15% savings over participating in a fully insured plan.

We are often asked, “How does an employer interested in self funding the healthcare benefits pursue it as an option?” If a company determines self funding may be appropriate, company leaders should:
  1. Engage an insurance broker or health benefits consultant to guide the process;
  2. Do a cash flow and risk analysis to determine the monetary resources available and the employer’s risk tolerance;
  3. Identify the plan benefits desired;
  4. Identify the amount and type of stop loss coverage desired to protect against catastrophic or unpredictable losses;
  5. Discuss the types of additional benefits desired: medical/case management, dental, vision, pharmacy benefit manager, flexible spending account, wellness, etc.;
  6. Discuss the type of provider network needed;
  7. And last, but certainly not least, companies moving to self funding will need to contract with a reputable third-party administrator (TPA). This TPA will work with the employer’s broker/consultant, to bring all the diverse pieces together in a cohesive benefit package and will provide the administrative services, systems and process to implement the self-funded plan.
There are many important players in the self-funded community, including stop loss carriers, networks, medical managers, wellness companies, legal counsel, compliance companies, underwriters, audit firms, healthcare systems, brokers, human resource managers and consultants. Selecting the right TPA is a critical addition to the team and is critical to the success of an employer’s self-funded plan.

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