Unwrapping The Myths and Misinformation About Partially Self-Funded Health Plans
The preponderance of myth, misinformation and outright lies about self-funded health plans is unnecessarily hurting employers’, employees’ budgets and benefits. Before the next renewal learn the facts, investigate the savings and take back control!
My company isn’t big enough for self-funding.
That may not be the case! We ordinarily write health plans and total benefit packages for 50 employees or more.
Self-funding is hard to understand.
It may seem that way at first, because for the first time you’re getting a transparent look into the elements of your health plan that are usually wrapped up and hidden in traditional insurance. In reality, you’ll finally be able to see – and therefore control – what you’ve been paying for in fully insured plans; claims, catastrophic insurance protection and a small administrative fee are all unbundled. And don’t forget that MBA is more than happy to answer any question you have at any time!
“Self-funding” the same as “self-insured”, where employers are financially responsible for everything.
Sometimes the terms get interchanged incorrectly. “Self-insured” plans are for only those employers who are large enough for it to be financially beneficial to pay for all claims, and forego buying any insurance. “Self-funded” or “partially self-funded” health plans are a combination of employer-paid claims and low-cost catastrophic insurance to protect them from a claim that crosses pre-determined limits. The combination makes partially self-funded plans less expensive than traditional, fully insured plans.
Employers have no protection from large claims, and these could break the bank.
With self-funded plans you actually have two safeguards from high claims; 1) A maximum, or “stop loss” for individual claims called your “specific”, and 2) an “aggregate” stop loss that limits employer responsibility for claims for the total group. The limits of both are pre-determined and balanced for the number of people covered, your comfort level and are calculated for the most savings possible.
Self-funding doesn’t help employers in the long run. Renewals are high and soon I’ll be right back to a fully insured plan.
Most of our clients have actually enjoyed just the opposite; initial savings and flat renewals are why many stay with us for an average of 12 years! This is made possible by our multiple claims management strategies and our ability to “shop” your catastrophic insurance with multiple carriers. Unpredictable renewals are not in our vocabulary!
My current carrier offers PPO and HMO options which provide discounts on claims, thereby giving me big-group buying power I can’t get elsewhere.
We too can offer PPO and HMO options, but don’t be fooled by “discounts” and “in-network” vs “out-of-network” charges which are supposed to save money. In many cases the claims or charges are not called into question…they are just discounted.
- Do you really want to pay for a circumcision – on a female?
- Is 30% off a charge that is 10x’s too high still a good deal?
Our approach to claims management is totally different. Our process looks at each facility claim through partnerships with ELAP and AMPS. Excessive charges are repriced and negotiated for you to a reasonable price and fraudulent claims are rejected, saving you vastly more in the long run. It’s your money - Let us provide your buying power!
For my employees who are scattered in several states and locations, using multiple fully insured plans is the only way to cover them all.
Actually, with self-funded plans you can have all of your employees covered under one umbrella. Self-funded plans fall under the federal law, ERISA. This bypasses state-based insurance commissions and regulations, allowing you to avoid duplicate administrative costs and immense hassles. All-in-one is cheaper and easier!
I’ll never know what my costs will be with a self-funded plan.
That is absolutely not true. You will always know what your maximum costs will be; you just won’t immediately know how much you will save off of that maximum figure!
Self-funded maximum plan costs are basically made up of three things:
- Your budgeted maximum amount for claims per person and for the entire group,
- A greatly reduced insurance premium for coverage over your budgeted claims maximum, and…
- A small administrative fee.
The total of all three is your maximum liability for the year.
But your actual claims experience will likely be below the budgeted amount…and the money you don’t spend is money you keep! That’s why we can say, “You will know your maximum costs…you just won’t immediately know how much you’ll save!”