Self-funded healthcare plans incorporate several potential advantages for employers. As employer healthcare spending continues to rise, self-funded health plans remain popular. The benefits of self-funding healthcare plans are that rather than paying a predetermined amount, claims are paid as they occur, meaning there are fewer fixed costs that the employer can’t control, and there is increased control on claims expenses.
Self-funded healthcare plans are only growing in popularity. In fact, a 2020 Deloitte study found that 60% of covered workers in firms with three or more employees were in partially or entirely self-funded plans. There are even more benefits of self-funding healthcare, so keep reading to learn more and gain expert insights into where the industry is headed.
Top 5 Benefits of Self-Funding Healthcare
Beyond the increased financial control, companies can benefit from self-funding healthcare for the following reasons.
1. Access to Benefits
Self-funded healthcare plans provide increased transparency and control regarding employee benefits. Additionally, self-funded healthcare plans offer increased visibility into the claims, giving employers more opportunities to manage costs and secure savings.
2. Increased Control Over Risk
These plans also allow employers to purchase stop-loss insurance, which protects against catastrophic claims risk. Catastrophic illness includes those considered life-threatening or a threat of severe residual disability.
3. Transparent Compensation
Work with vendors that offer transparent compensation. At Health In Tech, you can administer your plan and run your program through our eDIYBS underwriting platform. The Enhanced Do It Yourself Benefits System allows you to underwrite and produce a bindable quote within minutes. Our platform provides twelve plans with four tiers within two minutes.
4. Fewer Regulations and Lower Administrative Costs
Self-funded health plans have less government intervention. Additionally, fully-insured plans have lower fees and costs, but the trade-off with fully-insured plans is that they are subject to state taxes, whereas self-funded plans are not. For comparison, fully-insured health plans have tax rates between 2-3% and mandates, which costs the employer more money and creates more areas to ensure compliance.
5. Budget Predictability
Self-funded programs let you plan your budget and determine what to pay each month. If your employees make claims that cost more than anticipated, stop-loss insurance will cover the extra. Alternatively, if you don’t use all the funds, the carrier will reimburse you for anything under the cap, leaving you peace of mind that you will always know your budget.
What Humana’s Exit Means for the Industry
In industry news, Humana announced earlier this year that they would be exiting the employer group commercial medical products business. The exit includes all facets of fully-insured, self-funded, and Federal Employee Health Benefit medical plans and wellness and rewards programs. Humana is leaving the industry due to a strategic review where they determined that the business “was no longer positioned to sustainably meet the needs of commercial members over the long term or support the company’s long-term strategic plans.” The exit will occur in phases over the next 18-24 months. With Humana exiting the industry, many companies enrolled in their self-funded plans will require a new vendor. With so much competition, evaluating your options, including Health In Tech, is imperative.
At Health In Tech, you know you and your employees are covered. We are in all 50 states, 4,727 hospitals, and work with 1,595,049 providers and are growing! We also offer the HI Card, which makes administering and using benefits more straightforward than ever, using our proprietary, single-standardized transaction platform for providers, payers, and patients. Click here to learn more about HI Card benefits.
Your Self-Funded Healthcare Questions Answered
You might have additional questions before switching to a self-funded healthcare plan. Keep reading for more information on some of our most frequently asked questions.
What Are the Risks of a Self-Funded Plan?
While there are numerous benefits of self-funding healthcare plans, that does not mean there aren’t risks. Some risks include financial risk since employers become responsible for claims, the evolution of healthcare, the need to ensure your coverage is valid for new procedures, and the risk of investing three to five years to reap the rewards.
What Happens if an Employee Goes to the Doctor with a Self-Funded Plan?
When an employee goes to the doctor with a self-funded plan, they must show a medical ID that is prepared and printed by the TPA. The ID card will state the network and mandatory information, including deductibles and copays. Once the visit is complete, the provider will submit a reimbursement claim to the TPA, as with traditional health insurance plans. From the employee perspective, the plan works like fully-insured or traditional plans.
What Are the Self-Funded Plan Costs?
The costs can seem complicated, but they are all included in your premium and broken down by type. The expenses include TPA fees, consultant fees, network access fees, stop-loss premiums, collateral contributions, medical claims, and pharmacy claims. It’s important to note that in self-funded plans, the employer is the payer rather than the TPA or insurance carrier.
How Do I Transition to a Self-Funded Plan?
The first step you need to take when working to transition to a self-funded plan is to determine what vendor you want to work with and then work with them to make sure you have all the necessary information and materials. Giving yourself around three months or more is advised to ensure everything is done correctly. However, if your organization has multiple levels, such as a board or HR committee, it is advisable to take around six months. If you have any questions about the transition or what you need, contact us today.
What Are Bundled Payments?
Bundled payments are when employers provide a flat amount for a service, accept the risk/reward that they reduce complications over time, and are financially rewarded for doing so. Bundled payments increase the incentive to eliminate unnecessary services and reduce overall costs.
Benefits of Self-Funding Healthcare with Health In Tech
Health In Tech reimagines self-funding healthcare and delivers disruptive innovation and proprietary technology to innovate how individuals previously thought about risk, underwriting, and self-funding. As a result, our processes are better, faster, and more efficient and will keep you covered from cradle to grave.
Rather than wait two weeks for quotes and overcomplicate processes, partner with Health In Tech and gain access to all-encompassing solutions that will help streamline your healthcare.
Get Started with Health In Tech
Health In Tech proudly serves brokers, TPAs, employers, insurers, and members and provides fully customized self-funded health plans. With Health In Tech, you can take advantage of all the benefits of self-funded healthcare and eliminate disconnection or dishonesty. To book a call, click here.