Why Employers Hesitate With Self-Funded Health Insurance

The cost of health insurance is high, and this leaves a lot of employers scratching their heads, not knowing which type of health insurance will help them save more money. Besides shopping around for a great insurance company, there are various options of health insurance today. 
One of the options today is self-funding that is gaining so much popularity. However, many employers think that self-funding is way beyond their league; while others even think it’s a crazy idea. 

Self-funding, which is also referred to as Administrative Services Only (ASO), is a self-insurance where the employer provides health benefits to employees through the company’s own funding. Therefore, the company acts as its own group health insurance provider. 

Self-funding allows employers to decide which benefits to provide, the amount they will contribute to medical expenses, etc. In short, the employer holds the risk, which is one of the biggest reasons employers are hesitant to get this type of insurance option. 

Other reasons business owners don’t switch is because of the following: 

They Are Fearful

Fear is the biggest reason an employer hesitates to switch to self-funded health insurance. Due to the risk of responsibility, many employers disregard the benefits of this type of health insurance option. 

They Dont Understand It Well

Another reason employers hesitate to make the switch is because they don’t understand how it works fully. Unfortunately, some would not even make an effort to speak to an insurance agent to have this type of health insurance explained. Therefore, they are left with nothing but poor information without proper knowledge about how it could be helpful. This lessens the chances of a business owner exploring their options and finding a more suitable health insurance option for their company. 

Theyre Afraid It Will Wipe Them Out

A lot of employers think that a huge health claim will be catastrophic for their finances. The truth is, self-funded health insurance comes with added protection through a Stop-Loss contract. This will protect an employer from major loss when they are faced with a huge claim. 

With all of these said, it’s crucial you speak to an insurance provider before you make any decisions with how you choose to provide health benefits to your employees. Keep in mind that self-funding is not for everyone, simply because there are companies that never get comfortable with the idea of it. 

On the other hand, if you’re considering self-funding, here are some things you need to ask yourself: 

  1. Do you want to control the cost of your claims? 
  2. Do you want control over the benefits you provide in terms of health? 
  3. How involved do you want to be in the decision-making process? 
  4. Are you willing to learn and fully understand health insurance
  5. Are you comfortable with the risk of self-funding? 

These are some of the questions you need to ask yourself before you take the plunge. Let us help you make the right decision, contact us here at National Insurance Partners Inc. 

Leave a Reply

Your email address will not be published. Required fields are marked *