Self Funding – Facts/Fiction

Self-funding is not for everyone; but those companies that choose this option enjoy tremendous advantages with lower costs, independence and  overall efficiency when compared to traditional “Brick and Mortar” carrier based health insurance offerings, even when including the ASO insurer/carrier self-funded model.

FACT: Fifty-five percent of the employers in the U.S. with more than 200 employees self-fund their health plans.  Unfortunately, there remains a significant group of health plan managers who remain completely misinformed about the self-funded health insurance system and omit this option from their otherwise credible yearly analysis

FICTION: Self-Funding Is Too Risky For Small Employers
Conventional knowledge states that you must have at least 200 employees to self-insure.  This is not true.  HRI is successfully self-insuring employers with as little as 75 employees and have cases with only 35 employees.  The key factor requires defining the employer’s risk tolerance and business discipline.  In any case, employers with 75 or more employees should always thoroughly review their self-funding options yearly.

FICTION: Self-Insured Plans Don’t Stack Up to Insured Plans
Not True.  The quality of benefits in self-insured plans is not inferior and may even be better.  For example, major insurers provide the same network to self-insured clients as to insured groups.  On top of that, the self-insured plan design does not have to change simply because you’re going to change out the network, which is not the case if you wished to change networks in an ASO or fully insured plan.  Every component of the self-funded plan is interchangeable without messing with the integrity of the plan itself.  Each component is marketed separately against other vendors offering similar services assuring the best service and, of course, price.  Longevity, lowered costs, same or better lists of providers means Self Insured potentially trumps insured in almost every case!

Horizon - Annual Cost Comparison Chart


Resources:

Understand more about self insured group health plans from SIIA (Self-Insurance Institute of America, Inc.): http://www.hcc.com/portals/0/subsites/hcclife/downloads/HealthCareSuccessPublicationl.pdf

Here’s a short video on Self Insurance from The Self-Insurance Institute of America, Inc. (SIIA):  https://vimeo.com/101655759

Visit SHRM.org for more information on how Employers Weigh Self-Funded Health Plans:
http://www.shrm.org/hrdisciplines/benefits/Articles/Pages/SelfFunded.aspx

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