Did you know that the majority of U.S. employees (63%) are already covered by a self-funded medical plan? The Affordable Care Act has increased employers’ interest in self-funding. From 1999 to 2015 the percentage of employers who self-fund has risen by nearly 20%.1 Whether you’re a self-funded newbie or a seasoned pro, there are three key decision points that will help you make the right decisions for your business: funding arrangements, claims administration, and stop-loss insurance.
Funding arrangement—how will you pay for health benefits for your employees? The first step is to determine your benefits strategy and financial goals. Understand your risk tolerance, size, and cash-flow needs to figure out if self-funding is right for you, and if you should also explore an accompanying stop-loss insurance plan.
Claims administration—Selecting your claims administrator will determine the provider network(s) available to you and your employees. The claims administrator and their approach could have significant impact on the success of your self-funded strategy and the benefits experience of the health plan members (your employees).
Stop-loss insurance—for many employers, the risk associated with a self-funded health plan is managed through stop-loss insurance. Choosing the right stop-loss carrier and level of protection depends on a number of considerations, including your business’s financial profile (which includes risk tolerance), claims experience, and the potential carrier’s product options.
Choosing to self-fund gives you the flexibility to design a health plan to suit your business and the opportunity to strategize about cash-flow management and stop-loss coverage as well as team up with your broker, administrator and stop-loss provider to contain costs and improve patient outcomes. Consider the three key decision points to develop an action plan.