When facing the decision about moving to a self funded healthcare plan, employers need to make sure they understand the factors involved in transitioning to an employee benefits strategy that will be beneficial for the business and will require proper execution to ensure plan success. So what can employers expect during this transition?
What To Consider About A Self funded Healthcare Plan
Listed below are some of the areas and topics to consider before making a decision on a new company healthcare plan.
Workload:
Many employers are hesitant to make the transition because they feel that a self funded plan increases the workload for the HR team and administrative staff. With any large scale business decision, lengthy paperwork, turbulence, and mandatory education are all natural byproducts for an organization during the process.
In addition, employees are less likely to be on board with the move due to lack of understanding of the benefits and employers may have a heftier workload as a result.
These factors contribute to the sentiment from employers that the first 60-90 days in a transition to a self funded health plan are usually the hardest. That said, with a strong game plan for implementation in place, challenges like these can be prepared for and overcome.
Potential For Errors:
When switching from fully insured to self funded, it is important to remember that transitions such as these have the potential to cause problems including mismanagement and decreases of employee engagement due to lack of new plan education or understanding.
Mismanagement can negatively affect an organization’s ability to provide adequate health coverage for employees. Similarly, lack of engagement can result in employee dissatisfaction and unproductive work environments that create potential for errors.
Cost Uncertainty:
Due to the nature of self-funded plans, employers run the risk of being exposed to high losses if unexpected or extraordinary claims occur. Unlike a traditional fully insured healthcare plan, self-funded plans create an environment where employers have more control over each component of the company insurance plan, so it is pivotal to a company’s success for employers to understand the responsibilities and risks involved and prepare for them accordingly.
How Self-Funding Can Help:
While the above concerns are valid when considering a self-funded health plan for your business, properly structured plans and well executed strategies can reap considerable benefits for companies willing to make the transition. Here are a few ways that a self-funded plan can be beneficial to your company in the long run.
Flexibility:
A self funded plan, as opposed to a fully insured plan, helps eliminate a one size fits all fully insured plan approach by allowing employer groups to add more carriers and customize based on their employees needs.
Cost Benefits:
There are several ways in which employers can save via a self-funded healthcare plan. The biggest savings generally come in the form of claim reduction. In a fully insured health plan, the carrier retains 100% of the insurance premiums regardless of how well the health plan performed; with a self-funded plan model, lower claims allows the business to retain those additional funds. State-levied premium taxes are also generally lower via a self-funded plan.
Higher Quality Treatment:
Self-funded plans provide employers the ability to work with particular carriers or networks, receive one on one assistance via dedicated service teams, and customize plans tailored to the specific needs of the business. The ability to structure plans tailored to cost control and quality of care is a top benefit in a self-funded plan.
Access To Data:
Getting control of plan data and having access to data helps you determine where your costs are going and make appropriate plan design changes if necessary. Easier accessible data on health care usage also helps distinguish trends and opportunities for cost savings.
Analytics tools integrated with self-funded plans are also useful in their ability to identify metrics such as overutilization, gaps in care, and chronic care members before they become large case members.
What Is Most Important In Making The Transition To Self-funded?
The decision to shift to a self-funded plan is an important one, and can have a number of advantages including greater flexibility, higher quality treatment, and cost savings. However, without the proper understanding and preparation, the path to benefits such as these may not be as clear.
That is why the most important factor in this process is to familiarize yourself with the options you have and create a thought out strategy prior to making the shift. Utilizing resources such as benefits consultants to provide knowledge on the factors involved in a transition is fundamental in ensuring the process is well run and an engaged workforce is present.
Talk With New City For More Info On Self-Funded Healthcare Plans
Self funded healthcare plans can be complex to someone first looking into switching. Each company is different and integrating a self-funded plan could be the right choice for your business. Talk with New City Insurance about a self-funded healthcare plan and see how making the switch could save you time and money in the long run.