Small to mid-size businesses must be creative to survive in a competitive market. For many of these businesses, embracing a new kind of healthcare strategy is key to controlling costs and attracting top talent. These businesses are increasingly moving toward self-funding plans to reduce their healthcare costs and gain greater control over their healthcare benefits. Self-funding, also known as self-insurance, is a healthcare financing model in which the employer assumes the financial risk for providing healthcare benefits to its employees.
There are several reasons why small businesses are opting for self-funding plans:
- Cost Savings: Self-funding can be a cost-effective alternative to traditional fully insured plans. Self-funded plans offer more flexibility and control over benefit design, which can lead to lower administrative costs and more efficient use of healthcare dollars.
- Customizable Benefits: Self-funding allows businesses to customize their benefit plans to fit the unique needs of their employees. Employers can design plans that address the specific healthcare needs of their workforce and offer a range of benefit options, such as wellness programs, telemedicine, and prescription drug benefits.
- Risk Control: Self-funding allows businesses to manage their healthcare costs and mitigate the risk of large claims. Employers can implement strategies to reduce costs, such as cost-sharing arrangements, stop-loss insurance, and wellness programs.
- Regulatory Relief: Self-funded plans are exempt from certain state insurance regulations, which can reduce administrative burden and compliance costs for businesses.
Impressive Statistics:
- 20% average annual savings compared to fully insured.
- 95% latest retention rate from captive. Imagine never having to change your carrier again.
- $24.4M unspent captive premium distributed pro rata in 2022.
- 10% average distribution to captive participants.
Businesses considering self-funding should work with experienced consultants and advisors to assess the risks and benefits and develop a plan that meets their unique needs and budget.
If you are interested, please reach out and we can see if you are a fit for our educational Roundstone Conference.
Or Schedule a meeting with me!
-Eleanor Schroeder
Posted by John Hansbrough in Human Resources, News, Self-Funding