While leaders want to offer the comprehensive and flexible plans their people desire, many of them can’t risk the impact to their bottom line. Striking the magical balance may seem improbable.
However, there is a solution: The Kaiser Family Foundation reports that 82% of covered workers at large companies are enrolled in plans that either are partially or completely self-funded. Today, the model is gaining popularity among companies of all sizes, enabling small and mid-market companies to offer competitive benefits packages that give them an edge in recruiting and retaining top talent.
An uptick in self-funded plans began in 2013—the same time that key provisions of the Affordable Care Act took effect. Between 2013 and 2015, the percentage of small companies (fewer than 100 employees) offering at least one self-insured health plan rose to 14.2% from 13.3%, while midsized companies (100-499 employees) increased to 30.1% from 25.3%. It’s a gradual but steady climb that likely will continue as companies realize the cost-savings.
How self-funded healthcare plans work
Using a self-funded (also called self-insurance) model, employers pay health claims directly or through a third-party administrator (TPA). Many companies also purchase a complementary stop-loss insurance policy to limit their liability. Self-funded benefits can include medical, dental, vision, prescription medications or workers’ compensation. Costs vary from month-to-month depending on workers’ use of health services.
For employees, the health plan may look and operate the same. From the company’s standpoint, costs can be better controlled and administration streamlined with the following strategic plan design.
1. Offer care most employees need. Many of today’s traditional health insurance plans offer stripped-down benefits. A smart self-funded plan should include primary and injury care, rehabilitation and chiropractic care, labs, immunizations, generic medications and preventive services at little or no out-of-pocket cost. Other plans, including Minimum Essential Care coverage defined by the ACA, are heavy on diagnostics and light on treatment—MEC-only plans do not address employees’ ongoing medical needs.
2. Consider stop-loss insurance. To supplement a self-insured plan, companies can purchase stop-loss insurance to cover the most expensive healthcare—chronic illnesses, catastrophic diagnoses or accidents—and to ensure the business meets Minimum Value Plan requirements stipulated by the ACA.
3. Streamline care delivery. Companies may elect to hire a partner organization to manage the care delivery and logistics process, help employees navigate the system, and eliminate the waste, administration and overpricing rampant in today’s healthcare industry.
A healthcare revolution is upon us. Members of this revolution are demanding better outcomes, better experience and lower costs. They want to put the needs of companies and people first— before insurance companies, hospitals and pharma. Now, employers can take issues into their own hands through self-funding and better control costs while increasing the quality of care.