“A Better Alternative; Control, Information, and Cost Savings”
Inflation! Every day we hear the word on repeat. As of today, and as you have probably heard, the inflation rate is 9.1%, the highest it has been since the 1980’s. So as a CEO, CFO, HR, business owner; how does this affect you? First and foremost, your health insurance renewal rates will increase by double digits. Secondly, to retain and recruit top talent you are going to have to get creative because prospective employees want to know you have a top notch benefit plan and budgeting is tight.
How you can you beat the system and still have a competitive benefit plan? The answer is simple, self – funding! 84% of large firms are finding and seeing the success in self-funding, join the club!
Self – funding does not necessarily mean you are “getting into the insurance business”. Depending on the variability in risk you are willing to take, you can find a self funding solution right for you. Level funding, ASO, captives all offer different levels of risk assumption and savings. As an employer, understanding the differences and competitive advantages of each option is especially important during these times.
Control
Control is the first thing you lose in the fully insured market, from your cost to your plan design. Especially with inflation, the control is in the carriers’ hands when it comes to renewals which forces you to make a frustrating decision. Spending more money on one of your already top 3 business expenses, shifting the increased costs onto your employees, or downgrading your plan, either way you lose. You lose a great employee, you lose profits, and most importantly you lose control.
In a captive you can build out your plans, create custom designs, add cost containment strategies, with savings returned to you. However, when choosing the self funded solution that is right for you, look for a few things. Do they require any cost containment strategies? Are you able to choose the network of health providers and claim payors or TPAs, if so, are ones that are not approved at an extra cost?
Information
In a fully insured market, it’s always no or a lack of information especially for small to mid-market companies. No claims data delivered with a 20% renewal increase and no explanation except unknown medical costs, that’s the fully insurance world. As a business owner, how can you fix a problem that you don’t even know it’s cause?
With self-funding, you not only get to see your claims data in real time but also discover solutions to controlling these costs. Information is power in the health insurance world, once you find out your costs, you find a way to better serve your employee’s health care benefit needs. This is the way to retain and attain talent in today’s market.
Savings
Saving in one of your top 3 business expense opens the door for wage increases, hiring, lower employee cost share and overall, a better culture. How can self-funding help you deliver such a effective employee health plan while saving you money?
A recent study states, captives returned $5.8 billion in stockholder and policyholder dividends, this represents nearly $10 billion in fully insured cost savings. The success and savings is due to the long term strategy a self- funded captive solution delivers.
Whichever self-funded solution you find right for you, think of self-funding as an opportunity to pay as you go by creating a long-term health insurance solution instead of a 12 month lease.
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Posted by John Hansbrough in Self-Funding