Some employers may have held off on self-funding a health plan because they felt they were too small to service and couldn’t do it on their own. However, transitioning from a traditional plan to a self-funded plan doesn’t have to be a solo process. While the employer is ultimately responsible for decisions made in the plan, there are several partners to help guide those decisions to the best outcomes for employees.
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Benefits advisor or consultant. This a key member of your benefits team. You need someone who understands self-funding, and will be proactive about finding vendors whose interests are aligned with yours. An advisor will review your claims history to determine what kind of coverage you need and help you design a plan that will address your employees’ healthcare needs.
Advisors who consult on fully insured plans are typically paid by commission, which creates a conflict of interest for employers who are trying to find ways to reduce their premiums. That’s why it’s important to find an advisor who is well-versed in self-funded insurance.
Third-party administrators. Administering a health insurance plan is a full-time job. That’s why there are TPAs who can do that for you while you focus on your own business. Administrators will handle the day-to-day running of the plan, including processing claims, servicing plan members, and issuing payments.
Make sure you understand how a TPA charges for its services, and that the administrator understands the Employee Retirement Income Security Act of 1974 (ERISA), the law that governs self-funded plans. An advisor who understands your situation and goals can help you find the right TPA.
Stop-loss insurance and reinsurance. Stop-loss insurance builds a ceiling over your claims spend so that high-cost claims don’t derail your cash flow. There are two types of policies. With specific stop-loss, you can select a maximum level that you will spend per claimant. After an employee hits their maximum, the insurance carrier will cover those claims or reimburse the plan.
Aggregate stop-loss sets a maximum level for the entire plan. Springbuk notes that the aggregate level is based on your plan’s enrollment level and a percentage of anticipated claims.
Once again, a good advisor is invaluable. They can help you decide which type of insurance (or a mix of the two) is best for your company, and negotiate rates with carriers.
Self-funded doesn’t have to mean self-contained. Find partners who share your goal of breaking out of the traditional health plan trap.