The first question we usually get when we discuss customized plan designs is why we can not currently do this with our fully insured plan. In a fully insured medical plan, the insurance company assumes the financial risk associated with providing healthcare coverage to the insured individuals. The lack of customization in benefit packages in fully insured medical plans often stems from a few key reasons: risk pooling, administrative efficiency, cost predictably, and negotiating power.
In a fully insured plan, the insurance company pools the premiums from a large group of policyholders. This allows them to spread the risk across a diverse population. Since the insurance company is responsible for covering the costs of medical care, they typically design standardized benefit packages that cater to the needs of the entire group. Customizing benefits for each individual would complicate the risk assessment and management process.
Building your own medical plan design, often referred to as a self-funded or self-insured health plan, can offer several potential benefits, but it also comes with increased financial risk and administrative responsibility. Here are some reasons why organizations might consider customizing their own medical plan design:
- **Flexibility and Customization**: With a self-funded plan, you have the flexibility to tailor the benefit package to the specific needs and preferences of your organization and employees. This allows you to offer benefits that align more closely with your workforce’s health and wellness priorities.
- **Cost Control**: Self-funded plans give you more direct control over the costs of healthcare coverage. Instead of paying fixed premiums to an insurance company, you pay for actual healthcare expenses as they occur. This can potentially result in cost savings, especially if your employee population is relatively healthy and your claims experience is favorable.
- **Transparency**: Because you’re directly managing the plan, you have greater visibility into the cost components, including claims data, administrative fees, and other expenses. This transparency can help you identify cost drivers and make informed decisions to manage costs more effectively.
- **Risk Sharing**: While self-funded plans involve assuming some financial risk, they also offer the potential for shared savings. If your claims expenses are lower than expected, you can retain those savings instead of paying them to an insurance company.
- **Tailored Wellness Programs**: With a custom plan, you can design wellness initiatives and health promotion programs that align with the unique needs of your workforce. This can lead to improved employee health and potentially reduced long-term healthcare costs.
- **Plan Design Control**: You have the ability to implement plan design features that encourage cost-effective healthcare utilization, such as high-deductible health plans (HDHPs) paired with health savings accounts (HSAs), which can promote consumer-driven healthcare decisions.
- **Regulatory Flexibility**: Self-funded plans are subject to federal regulations (like the Employee Retirement Income Security Act, or ERISA) but have more leeway in terms of state insurance mandates. This can allow you to avoid certain state-level requirements that might not align with your organization’s goals.
Ultimately, the decision to build your own medical plan design depends on your organization’s goals, financial capabilities, risk tolerance, and administrative capacity. It’s advisable to work closely with experienced benefits consultants, legal advisors, and insurance professionals to navigate the complexities of self-funded plans effectively.
It’s important to note that while $0 primary care models offer numerous benefits, they may not cover all healthcare services. Individuals may still need to pay for prescription medications, specialist consultations, and certain diagnostic tests or treatments. Moreover, the financial sustainability of such models relies on efficient care coordination, appropriate funding mechanisms, and effective management of healthcare resources.
Whether implementing a $0 primary care model is beneficial depends on various factors, including the specific population being served, the organization’s financial capabilities, and the ability to integrate this model into the broader healthcare ecosystem. Implementing a $0 primary care visits model can potentially lead to plan savings in certain circumstances, but the extent of these savings will depend on various factors. The factors include prevention and early intervention, reduced emergency room utilization, lowering chronic disease costs, avoidance of unnecessary services, improved medication adherence, and employee productivity.
In conclusion, while a $0 primary care visits model has the potential to create plan savings, its success depends on a careful balance of factors including effective care coordination, patient education, provider capacity, and financial planning. It’s advisable to conduct thorough cost-benefit analyses and consider the unique characteristics of the population being served before implementing such a model.
To learn more about self-funded plans and building your own plan designs, please come to our webinar series the September 5th, 6th, & 7th. On top of great speakers, multiple gift cards will be raffled!
Or schedule a meeting with me!