What’s the first thing that comes to mind when you hear “group benefit plan”?
Most people envision a traditional fully insured plan, in which the employer pays a premium for a preset plan design. Although the insurer assumes all the risk, it comes with a price—premium includes projected claims costs, overhead, commissions, reserves, risk charges and taxes. In addition to the financial drawbacks, flexibility is very limited.
The alternative is a self-funded plan. Simply put, a self-funded plan is one in which the employer assumes direct responsibility for financing health care claims. This tends to lower expenses and improve cash flow since the employer only pays for health care their participants use. A Third-Party Administrator, or TPA, is usually contracted for claims payment and customer service.
With a self-funded plan, employers gain greater control over plan design. Self-funding allows employers, in consultation with their broker, the flexibility to choose the right benefits to address the needs of the plan and its participants.
Risk mitigation is a primary concern for self-funded plans. As a line of defense against catastrophic claims, the employer can overlay a stop loss, or reinsurance, policy that meets their risk tolerance. In addition, HealthNow Administrative Services (HNAS) brings plan management tools - from in-depth plan reporting to wellness programs - to analyze and improve participant health. These measures work together to manage costs over the long haul.
At HNAS, our mission is to partner with brokers and employers to develop a customized, long-term strategy for high quality health benefits while still controlling cost. A premier health plan is still essential to attract and retain top talent, so perpetuity of that program is vital to our collective success. We believe self-funding is the cornerstone for achieving this goal.
Key advantages of a self-funded plan are that it can: