Employees are the lifeblood of businesses. Any successful business owes its wins to the dedication and efforts of its staff. So, if you’re a good business owner, you’d want to make sure that your employees’ health and wellbeing are secure and taken care of.
However, ensuring that your staff’s health requirements are met can be tricky. For one thing, fully-insured health plans offered by large insurance companies can be quite expensive. These plans may also only provide a set range of services and coverage that don’t really fit the individual needs of your employees.
If you’re a business owner, going for these set plans could mean paying high premiums for insufficient coverage. This is why a lot of businesses nation-wide are turning to self-funded insurance as a solution.
What Is Self-Funded Health Insurance?
Simply put, self-funded health care is an insurance arrangement where a business funds its employees’ health and disability benefits. The business takes direct responsibility over paying for any claims. This is opposed to the business signing up for a fully-insured health plan with an insurance company. In case of the latter, the insurer is the one who funds claim payments.
Is Your Company On A Self-Funded Health Plan?
As an employee, it can be hard to tell. Even if the business you work for funds your health claims, your health card may still carry the name of an insurance company. This is because many businesses opt to hire out the administration of its self-funded health insurance to a firm. But, even when an insurance company is contracted to process claims, the business is still responsible for securing the funds to pay these claims. If you’re an employee, its best to find out whether your company is on a self-funded health plan by asking your HR administrator.
Why Businesses Choose Fund Their Own Health Insurance
Assuming the responsibility of funding your employees’ health insurance claims can seem overwhelming. From an outsider’s perspective, it looks riskier than just signing up for a fully-insured policy with an insurance company. But there are real advantages to self-funded health plans for businesses, foremost of which is its customizability.
With self-funding, businesses are able to specify the services included in their health plans. This is opposed to going with more traditional fully-insured plans, where coverage is set according to the insurance company’s policy. Self-funded health care allows businesses the flexibility to take care of their employees’ different health needs.
The customizability of self-funded health plans can also be good for the business’s bottom line. In fully-insured plans, businesses pay a fixed premium based on the number of its employees enrolled in the plan. These premiums can be quite expensive. In self-funded arrangements, the business pays varying costs on the plan based on the health care usage of employees.
Moreover, businesses can get stop-loss insurance to manage the risk of self-funded health plans. Stop-loss insurance reimburses businesses for excessive costs on catastrophic health claims.
All in all, self-funded health plans can allow businesses to respond to their employees’ specific health needs while saving on cost. If you’re thinking whether this health insurance solution is right for your business, visit National Insurance Partners to learn more.