Who is the best candidate for self-funding their international health insurance?
The assumption of this article is that as groups tend to grow, they will seek greatest cost-effectiveness and control of costs over time, and therefore will be drawn to the advantages and saving associated with self-funded health plans. However, that is not always the case, nor does it make sense in all cases.
Our hope is that this article will help you determine if self-funding is for you.
1.) The general rule of insurance is based on SIZE:
From 2-20 (up to 500) – Best is an international group health insurance plan (either ACA-compliant or not), or possibly a level-funded plan if your group is healthy (submit few large claims), but your rates keep going up.
From 20 to 200 (and up to 500+) – Best is a partially self-insured plan or level-funded that has many of the same benefits of a self-funded plan without the risks and the high administration, regardless of whether one has chosen partially self-insured with the intention of progressing to self-funded, or based on it’s own merits. These plans allow for plan design excluding things you may not need or want to include, based on your staff, may be the same price as a traditional ACA plan, but also feature better networks, better benefits for the price and give you the opportunity for a refund of $.30 to .40 on the dollar at the end of the year if you remain healthy (domestic health plans).
From 100 – up (to 500+) – Choose a self-funded plan where the risk can be spread across the largest number of employees/units and annual rate-ups can be avoided. OR: A partially self-insured plan, level-funded plan that includes the best of both worlds, less risk and less overhead/administration than a purely self-funded plan.
2.) Apart from size requirements:
Generally, if your group is healthy, and growing, you are going to want to consider the control, flexibility and savings of being self-funded/level-funded, especially if your employees/staff are younger in age.
Some groups, while generally healthy and young, may not have the reserves built up to start self-funding their health plan. They also may not have a “history” of either claims or renewals for risk assessment purposes/reinsurance – These groups will be best served by considering a partially self-insured plan or level-funded plan to begin, which allows them greater time to build reserves and learn how to run their own plan. MANY of our groups like the flexibility and minimal risk associated with partially self-insured/level-funded plans and stay with them for many years without planning to switch back to either traditional insurance or into truly self-funded insurance.
Groups that choose partially self-insured/level-funded plans will:
Create time to build their reserves
Time to retrain staff in use of benefits to keep costs down
Allow them time to learn the administration of their organizations healthcare
Allow them time to grow in size where the risk is not as great per employee
Some groups may be large enough, or may already be self-funded, but the time management and administration, not to mention “lasering” may cause them to consider returning to fully funded health insurance – These groups are generally best served by partially self-insured plans which retain the benefits and savings without the burdens of self-funding. In fact, many groups that are large enough to easily self-fund continue in partially self-insured plans for years and years, and they consider it to be a best-kept secret in the health insurance industry.
Administration. Some groups may not have the staffing necessary to self-fund. We can help you assess this, and in those cases, would recommend a partially self-insured plan.
Some groups due to the age of their staff, claims, or their size, may not want to consider self-funding, and in some cases, even partial self-insuring may not make sense. We should be able to quickly tell you if this is the case and devise alternate strategies to save you the most money now, and into the future. Of course, the best time to consider changes is when your group is healthy and doing well, not you’re your group is experiencing trouble.
Generally smaller groups are going to face bigger risks in a self-funded plan since the risks are greater and reserves smaller (due to fewer people necessary to spread the risk). Also, your reinsurance and stop-loss limits tend to be high, so that a few chronic or lasting claims in a year or two could wipe out any reserves/savings realized and require rate increases on all employees to cover the costs. Multiple, lingering repeat claims, as well as the time commitment to administration, are the main drawback to self-funding.
3.) International medical specialists/experts, or the lack thereof:
Groups of all sizes should carefully consider the need or lack of international specialists when it comes to insurance and self-funding their own health plan.
This should be considered as one of the biggest factors for groups with staff living overseas as expats or foreign workers.
Traditional, fully-funded insurance:
Partial self-insurance/Level-funded Insurance:
Fully funded and partially self-insured/Level-Funded plans have a full complement of doctors, nurses, translators, claims and cost-control specialists who know the best hospitals, doctors, treatments and costs associated all over the world, and can rely on and trust that network.
Self-funded health plans:
Self-funded health plans do not have this resource available to them, but assume full responsibility over the task of learning international standards and costs, approving recommendations made to them by third-party administrators (many who may have less experience or awareness internationally than the group itself), qualifying the costs of exams, whether to fly the injured to a third-party nation for treatment, whether to treat in country, whether therapy in the USA is recommended,… international groups must consider if the savings realized in fully-funded plans are commensurate to the loss of medical expertise and international specialization.
4.) Risk assessment/management
Each organization is different and their philosophy regarding risk management and control is different. Insurance is primarily a way to address risk. If one had enough resources, invested wisely and on-call as needed, we would argue that insurance was not necessary (except for catastrophic insurance as a financial tool ).
As an organization, that medical risk increases exponentially, especially when dealing with families and those stationed overseas on assignment.
The “dollar value” or assessment each organization places on that risk will be different.
For those seeking the most protection/least risk: We recommend either fully-insured or partial self-insurance. For those seeking maximum savings and control of costs, payouts, claims, and self-determined benefits, we recommend self-funding.
NOTE: Many groups assume that fully-insured clients have little or no control over benefits in regards to health plan offerings. This is simply not true. Good Neighbor works hard to customize each health plan to meet the specific needs of our clients and their workers regardless of whether they are fully-insured, partially self-insured or self-funded. Plan design and customization may be unique since not that many brokers bother to do it, but is a part of our services here at Good Neighbor Insurance regardless of the type of health plan that you decide fits you best.