Benefits of Self Funded Insurance & How to Get It

When you think about health insurance coverage, you probably imagine having to pay premiums to insurance companies and then file claims when one of your employees get sick. Then, the company pays the claims, while keeping what is left over for profits. This is just the way things work, isn’t it?

Well, it definitely is. But, there is no denying the fact that there is another option, and that you should, thus, look into the concept and the benefits of self funded insurance, in order to determine if it may be right for you. Because, self funded insurance is that other option that I am hinting at here, and it could definitely be a smart move for you as the employer, giving you more control and often even saving you some money.

The thing is, though, while you may have heard of this solution already, you may not be sure what it precisely entails. What we are going to do right now, therefore, is check what self funded insurance is, what the benefits are, as well as how you can get it. In short, we’ll answer the important questions for you below, so keep on reading to learn what you need to know.

What Is Self Funded Insurance?

Let’s start with the basics. What exactly is self funded insurance in the first place? Well, what this term basically refers to is the idea of the company itself paying for employees’ healthcare directly, instead of paying a fixed amount to an insurance provider. So, when an employee goes to the hospital, or to see a doctor, the bill is actually paid by the employer, and not the insurance company.

Usually, a third-party administrator (TPA) is hired to actually mange the plan. These professionals handle the claims, deal with customer service, as well as provider networks. But, ultimately, the money that has to be paid comes out of the employer’s pocket. Click this to learn a bit more about this particular concept in general.

What Are the Benefits?

We are now going to move on to the next question. After all, there is no doubt that you are wondering what the actual benefits of such an arrangement are. You may be under the impression that paying for everything alone is not the right move, and that it can wind up costing quite a lot, but the truth is that it could actually be rather beneficial.

For starters, you could even save money this way. This is because you won’t be paying insurance premiums, taxes on those premiums, or any kinds of built-in safety cushions that the insurers actually use in order to protect themselves. Instead, you will only be paying for the actual claims and the administrative costs, which can result in you saving money in the long run. Sure, you could wind up paying more one year in case there are some higher claims, but careful and smart planning is absolutely going to help you save money this way.

Another great benefit lies in the fact that you are actually the one in control of the actual plans. Meaning, thus, that you can tailor them to fit to the specific needs of your employees, which is sure to boost morale and keep the staff happy, resulting in higher retention. This kind of flexibility helps you support not only your employees, but also your budget, since you’ll be careful to choose precisely what fits that budget.

Moving on, there is also the benefit of getting a clear overview of all the costs. When it comes to traditional insurance, employers, more often than not, don’t really understand what it is that is driving their premiums. With self funded insurance, on the other hand, you have clear insights into where your money is actually going, and this kind of control is undeniably rather helpful.

Here’s a simple overview of what self insured plans are: https://www.healthcare.gov/glossary/self-insured-plan/

How to Get It?

Having understood some of the benefits of doing this, what you want to do next is figure out precisely what it is that you should do in order to get a good self funded insurance plan for your company. And, well, the first thing to do is assess your situation, figure out how much you’re currently spending on insurance, find out what the employees would benefit from, and then decide if this kind of a solution could actually help you save money, and keep the staff happy along the way.

Once you’ve made decisions on what you need, the next thing to do is find a good partner to handle the actual technical side. So, hire a good TPA that will be responsible for handling the claims, compliance and anything else. Make sure to research different ones and then choose a reliable and trustworthy TPA. When that is done, you will be ready to design a great plan, set your budget, as well as launch and monitor the actual plan.