With escalating medical costs and the Affordable Care Act, many employers are looking to self-funded or self-insured healthcare programs as a viable healthcare option. Employers who self-insure health plans are directly responsible for paying medical claims rather than paying for conventional health insurance policies. A self-insured employer selects the plan design and typically hires a third-party administrator (TPA) to manage the plan. Employers that cannot afford or do not want to be responsible for catastrophic claims purchase stop-loss insurance that covers claims after they reach a certain level.
Benefits of Self Insurance
By going the self-insurance route, employers have greater portability, flexibility and customization for a stop-loss strategy over fully insured programs. Additionally, self-insured plans offer employers the ability to customize their healthcare plan design, reduce premium taxes and provide a greater level of transparency when it comes to the actual costs of healthcare plan administration. Moreover, any cost savings derived from a favorable claims experience remain in plan reserves, unlike a fully insured program where premiums are an unrecoverable cost.
Self-insured healthcare plans pay premium taxes and commissions on stop-loss premiums only, resulting in lower overall employer healthcare program costs. Profit margins and risk charges, typically associated with insurance carriers, are eliminated from the self-funded plan. Other economic advantages include increased cash flow, interest income on claims reserves and gains from cost containment efforts.
Self-funded plans also allow group administrators to design efficient and effective benefit programs to meet their budget parameters and employee needs. Employees can choose from a broad array of benefit plan configurations, selecting options that are important to them depending on where they are in the lives.
Typically, when establishing self-insurance plans, there are several components that make up successful programs. These include:
- Wellness programs and Disease Management programs designed to improve employee health while managing healthcare costs and the level of care necessary for treatment
- Catastrophic intervention programs to manage chronic and severe cases requiring aggressive treatment programs
- Stop-loss plans based on risk tolerance
Caitlin Morgan provides self-insurance alternatives for employers and has recently developed a new product, Health Select, a stop-loss captive that groups together high-performing companies to provide cost stability and accountability in healthcare. Health Select is designed to provide mid-size employers – anywhere from 25 to 500 employers – with the benefits and cost-management tools typically available to larger self-funded clients. Health Select is initially available in Indiana with future plans to make the program available nationwide. For additional information about self-insurance healthcare plans, please contact Caitlin Morgan at 877.226.1027.