First and foremost:
Excellent self-funding candidates are financially secure, wish to control their health benefit costs and information, and are willing to stick with self-funding long enough to experience all of its positive effects. Poor candidates for self-funding employers are financially unsound, who are using self-funding strictly as a desperate measure to reduce short-term costs.
The following is a comparison of actual client costs from self-funding plans designed for them by Beneflex. All these group plan designs used current or upgraded PPO networks, all were greatly improved ¦ AND ALL RESULTED IN HUGE COST SAVINGS!
Employers often self-fund to reduce their health plan costs. Over time, an employer can expect a self-funded plan to be less expensive than an insured plan, but they must realize achieving sustainable savings requires a long-term commitment to the plan.
The key to reducing costs in a self-funded plan is to continually manage and control the plan. Self-funding requires an employer to be involved in the details of the plan, and requires a group`s full commitment and attention. Once set up, however, a self-funded plan requires no more effort than a fully insured plan.
Reducing the fixed costs of an insured plan (premium taxes, expenses, commissions, claim margin and profits) provides the most significant opportunity for long-term savings. It is during the years with low claim costs that self-funded savings are greatest. Although a group may be tempted to recapture these savings, it is often better for the plan to do this only after an adequate claim reserve has been established. Claim reserves and the tax-preferred investment income produced by those reserves, may prove helpful in a year with unexpectedly high claims.
Employers voice a common frustration over the limited control they have over health plan costs. Most find they have less control over these expenses than any other area of their business. Self-funding provides many tools to help employers to regain control of these costs.
Plans that are self-funded give you better control of your:
If you are wondering about the appropriateness of self-funding for your employee benefit program, consider participating in our complimentary self-funding right-fit assessment. Click here to contact us.
