Across the country, more and more businesses are setting up their own health plans to save on cost and provide their employees with more responsive health benefits. Self-funded health insurance can be particularly advantageous for businesses in some cities, that have some of the highest insurance premiums nationally.

If you’re considering setting up a health plan for your business, this article goes over the practical steps in the process. It will also give you tips on things to consider before you decide to take responsibility for your own health insurance.

Deciding If A Self-Insured Health Plan Is Right For You

As with any business decision, you have to weigh the risks and benefits of funding your own health insurance.

The main advantage of going the self-funded route lies in the customizability of self-sponsored health insurance. In this arrangement, you get to pick and choose which health benefits and services your plan will cover. This has two benefits:

  1. You can tailor your health benefits package based on what your employees need the most; and
  2. You only pay for the benefits and services that your employees make use of and benefit from.

This is, in contrast, to fully funded health insurance plans offered by major insurance providers, which come with a pre-set of health coverage and benefits that may not necessarily fulfill your employees’ individual needs. Not to mention, the extra coverage can bloat the price of your policy premiums.

While bigger companies would still opt for fully funded insurance plans, those that have tighter budgets may be more attracted to self-funded health insurance. This is especially true for businesses located in some states where they could pay over $8000 per person if they sign up to traditional insurance. Once you decide that a self-funded health plan is right for you, it’s time for the following steps:

Assessing Your Health Plan Needs

In creating your own health plan, you need to consider the people who will be covered by it. What are their healthcare needs? How much in reserve funds would your business need to set aside to support such healthcare requirements? You can answer these questions by:

  1. Survey the people who will be covered by your plan—your employees.
  2. Gather information on your state’s average healthcare costs. Compared to others, some states have higher healthcare expenses per capita.
  3. Review any previous health claims your business has filed with your past insurance providers. What’s the average cost of claims from month to month? What are the highest and lowest limits of your employees’ health claims?

Collecting such information will help you assess the kind and level of health benefits your employees need. It will also give you an idea of how much funds you need to secure in order to pay out future claims.

Hiring A Third Party Administrator (TPA)

TPA will take charge of processing your employees’ health claims and transferring payments from your health fund to their accounts.

Your TPA also serves a consultant role while you go through the process of setting up your business’s health plan. They should be able to help you procure stop-loss insurance for catastrophic health claims, select the most appropriate network of healthcare providers, and help you draft your health plan document.

Formalize Your Health Plan In Writing

Once you’ve decided on the benefits and services your health plan will include, your TPA should be able to draft your health plan document. Review the draft carefully before signing off. It would also be a good idea to get your legal counselor to study the document.

Establish Your Banking Account

Set up a separate banking account for transactions related to your health plan. The account should let you issue checks or make online transfers un order to pay out any future health claims. Your TPA should also have due access to this account.

Enroll Your Employees Into The Plan

Give a copy of your Health Plan document to each of your employees. Let them select the coverages they need from the list of health benefits your plan offers. Communicate all this information back to your TPA.

Distribute Health Cards Among Employees

Your TPA should be able to produce Health ID Cards for each employee covered by your plan. Once the ID Cards have been made, distribute them among your employees. Together with the cards, it’s also common for TPAs to provide brochures or links to electronic resources to orient their employees about the plan’s basics and how to file claims.

If your business is planning to set up its own self-funded health plan, we have an expert team ready to assist you. Contact us today at National Insurance Partners

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