The key to saving isn’t self-funding. It’s controlling health insurance costs.
One thing you need to know about self-funding, or partial self-insuring: If you don’t have a good idea on how to control costs, and a good plan design, you may find you have to increase premiums as costs go up over time. As a non profit or small business we realize that controlling health insurance costs is a primary concern, so this page talks about how self funded insurance can help you, and some specific things you can do to address this issue.
Sure, you will be saving on annual premiums and banking them, and also saving on annual rate increases, however, based on your employees wellness, use of their benefits and how well you can anticipate needs and projected future costs, you may find the amount of claims annually, as well as large unexpected claims (such as chronic conditions), eating away at your reserves and cause you to be paying more than anticipated, cutting into savings.
How to control our health insurance costs?
The answer of course is:
- Having good data to build a plan design on (claim history)
- Really know the current and past health of your employees (and aware that 20% of your employees, or covered individuals, will be responsible for 80% of your large claims)
- A good ability to predict future claims and comorbidities
- An internationally known and experienced TPA
- A good network that can secure you discounts of services and care
- A well-designed plan to control costs and behavior
- How much controlled risk you want to put back on employees/additional costs they may be responsible for (As a company, risk is either owned, transferred to employees, or transferred to an insurance carrier in some fashion or another – The amount of risk is the question. That’s why we also specialize in partially self-insuring as another option for many companies)
- You can get a peek at real healthcare costs averaged per employee here: http://www.youtube.com/watch?v=iyjfafL8WWA and learn more on our YouTube channel here: http://www.youtube.com/playlist?list=PLNLs4yRPBGxRCprfUWgjgAHSRuMVWqPvm
OF THESE, LONG-TERM, THE MOST IMPORTANT MAY BE THE KNOWLEDGE THAT RESULTS IN GOOD PLAN DESIGN
The right plan design is key to controlling behavior which controls claims which in turn controls costs. (All the large insurers know this – Which is why today you see employees being rewarded for low blood pressure, not smoking, and other health incentives to encourage better health. Or choosing to charge more for employees to go outside of network where associated costs are higher. Or charging more for emergency room trips than going to a doctor/urgent care facility.)
Whether you plan to self-fund or partially self-insure, knowing what limits to set, how to structure home staff versus staff living and working overseas, the right amount of reinsurance to keep your reserves from being used up, the right amount of reserves for your organizations size and health, this ability to create and implement a workable, cost-saving plan design is the “secret sauce” to self-funding your health insurance. Is it also key to controlling the costs of stop loss insurance. Because there is no one, right answer. There is no one set plan design that will fit every organization based on size. So the best, most experienced consultants in setting up good, working plan designs are sought after. Especially by organizations that have tried working with those less experienced or doing it on their own and achieving less than stellar results…maybe even considering going back to a fully-funded traditional international health insurance plan. If you have gained experience the hard way, through your own trial and error, you understand what we are talking about.
In our professional opinion, changing reinsurers, adjusting benefits (which usually causes unhappy employees),…no other single item will have as much of an impact as plan design.
IS PLAN DESIGN MORE IMPORTANT FOR SMALLER OR LARGER ORGANIZATIONS?
Yes. Plan design is critical to both types of organizations for slightly different reasons.
Larger organizations can weather more claims/costs yet due to their size, these costs can become significant and again due to size, changing the behavior of those insured and/or resolving chronic claims may take much longer to resolve themselves.
Smaller organizations will have less ability to absorb a series of large claims since their pool is smaller and generally will have a smaller reserve fund. They will also have less access to discounts and other benefits of large (multi-thousand) firms. And their costs are higher since spread among fewer employees.
So the answer is, both. Plan design is critical to every group that has a self-funded plan, or is considering either partially self-insuring or self-funding their health insurance.