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Three health insurance trends happening now: Self-funded insurance and other news
1. Smaller companies self-insure. Large companies with more than 5,000 employees are a common feature of the self-funded health plan market. However, small and mid-size firms across the country are increasingly turning to self-insurance to reduce healthcare costs, reports CFO.com.
In fact, the percentage of employers with fewer than 1,000 plan members that self-insure has grown from 29 percent in 2008 to 48 percent in 2010, according to PricewaterhouseCoopers (PwC). “The reality is that companies with below 1,000 lives do experience more fluctuation [in cost] than [larger] ones,” Michael Thompson, a principal in PwC’s human-resource services group, told CFO.com. “But insurance companies don’t necessarily protect them any better, because they just base their rates on their past experience.”
Many employers may be getting the impression that fully insured health plans don’t protect them at all. Case in point: In May, the city of Temple, Texas, received proposals for its fully insured health plan that included cost increases ranging from 46 percent to 103 percent. So this Oct. 1, Temple will transition to a self-funded health plan, as well as providing stop-loss insurance, according to a press release. Temple expects the self-funded approach to bring “more transparency in our utilization and costs, and save a lot of money ” said City Manager David Blackburn.
Employer Self-Funding and Self Insurance Conference Sets Large Trends for Self-Funding Healthcare and Workers Compensation Industries
There is a shift away from offering fully insured benefits and towards self-insuring healthcare and workers compensation. Moreover, healthcare reform puts more obligations on fully insured health plans, this shift grows in order to maximize savings and reduce healthcare expenditures.
Introduction to Self-Funding
Partially Self-Funded Plans
Partially Self-funded Plans offer an alternative to traditional health insurance plans. They allow you to budget for small predictable claims while protecting the group against unpredictable catastrophic claims, through the purchase of stop loss protection. A partially self-funded plan can be written for groups with as few as 5 participating employees.
Advantages of a Partially Self-Funded Plan
Reduced Fixed Costs
All health insurance plans have administrative costs associated with the payment of claims. A partially self-funded plan typically saves 30% on these administrative costs over a traditional health insurance plan. Learn More »
Unlike traditional plans where you pay a premium that funds claims IF and WHEN they occur, claims under a partially self-funded plan are paid only WHEN they occur. YOUR money for claims therefore, is only required when claims are paid allowing YOU to earn interest on YOUR money instead of an insurance company. Learn More »
With partially self-funding you have endless possibilities for plan design. Copays, coinsurance, deductibles, covered benefits; excluded benefits can all be tailored to meet your needs. As the employer you truly have the ability to customize your employee benefits. Learn More »
Claim Utilization Report
Claim utilization reports identify claim trends specific to your group and allow you to better manage and control the costs of your benefit plan. Learn More »