America's Benefit Specialist November 2022

NOTE TO SELF: FOUR REASONS YOUR CLIENTS SHOULD CONSIDER SELF-FUNDING

By Drew Burns Mid-Market Sales Leader Centivo Kansas City, Missouri

is who assumes the risk 1 for paying claims. In a fully insured plan, all premiums remain with the insurance carrier, whether they were paid out as claims or not, at the end of the plan year. With a self-funded plan, a company pays all the medical and pharmacy claims for its covered employees (with protection for large claims). Because the company is paying the claims, it can account for every dollar, 2 customize benefits and vendors, avoid state mandates and premium taxes and, in a better-than-expected claims year, reinvest savings. It’s a bit like buying versus renting a home. When you rent, you write a check for the roof over your head and are forced to follow the landlord’s rules. In a buy scenario, you’re building equity. You may have good years (no leaks!) and bad years

(a failing roof), but you make the house rules. You get the flexibility to reinvest in the home and create a custom space to grow and thrive and, over time, reap the financial rewards of ownership. That’s the kind of promise self-funding holds in terms of controlling costs and cus tomizing plans. 3 But many employers don’t get far enough in the decision process to explore the upsides for a number of reasons, based in reality or not (more to come on that). The four I hear the most are: 1. They think the risk is too substantial for the reward. 2. They don’t believe their company size is large enough for self-funding to make sense. 3. They don’t have the bandwidth or exper tise to administer a health plan. 4. They find it less disruptive to just stick with what they know than face the unknown. What IS reality? Premiums continue to skyrocket. Healthcare costs are going up. And if you have a small to mid-size busi

Employers offering a fully insured health plan know renewal season can be full of surprises—and not usually welcome ones. With no clear claims data to justify ever-ris ing rates, it may seem there’s little they can do to lower their premiums, even if they believe their plan had good outcomes. What if, this year, you broke the cycle? What if, instead of blindly accepting the rate increase, your clients had actionable in sights? What if, instead of choosing how to manage and shift costs, they could choose options for reinvesting their plan savings? After spending a lot of time in this busi ness, I know where I’d start: by considering

the move to a self-funded plan. SUMMING UP THE SWITCH

To put it simply, the key difference between a fully insured and a self-funded health plan

MANY EMPLOYERS DON’T GET FAR ENOUGH IN THE DECISION PROCESS TO EXPLORE THE UPSIDE.

46 ABS | benefitspecialistmagazine.com