Many Small and Mid-sized Employers in Utah are Self-funding – Here’s Why.
Opportunity for small and mid-sized employer groups to minimize costs
Just thirteen percent of small and mid-sized employers are partially or completely self-funding their benefits plan, compared to 81 percent of large groups. In the past, self-funding was not an option for smaller employers; however, insurers are increasingly providing health plans with a self-funded option for small and mid-sized groups.
Next to an organization’s payroll, insurance costs, in particular, group health insurance is typically a company’s third-largest expense. With the Affordable Care Act group insurance rates are continuing to climb. As an organization, you MUST have a long-term strategy in place to control escalating costs. You can’t wait until you get that 20% renewal increase letter on your desk before you take action. Now is the time to start exploring all your options: self-funded, defined contribution, Alliance plans, professional services plans (i.e. engineers, etc.). The key to controlling cost long-term is having knowledge and an experienced Broker. Many cost-cutting solutions can easily be integrated or bolted onto your existing plan.
Why would employers want to move toward a self-funded plan?
In general, self-funded insurance plans provide employers with more transparency and control over their costs. With little transparency into the true cost of treatment, businesses often blindly pay for medical services incurred by their employees. Self-funded and Level Funded medical plans provide valuable data and insight to help control and manage costs.
The alternative to a self-funded plan is a fully-funded, or fully-insured benefits plan. The major difference between the two is who operates the plan and who pays the claims. With self-funded insurance, the employer operates the plan and pays the claims, while the insurance company operates the plan and pays the claims for fully-funded insurance.
A major benefit for employers who have opted for self-insurance is the savings potential. Employers assume the financial risk in a self-insured plan, as they pay each claim rather than paying a fixed premium to the insurance carrier. That means they can also reap the financial benefit of low-claim years.
Additionally, self-funded plans give employers more control and flexibility over the plan design and free them from the uncertainty of annual rate increases with fully-funded insurance.
The War for Talent is Real
The “war for talent” is real, this is the tightest labor market we’ve seen. You’ll win more talent and retain more employees when you provide exceptional employee benefits that don’t break the bank. We help small and mid-size technology businesses gain buying power to lower benefit costs. Through the Utah Technology Alliance plan we have lowered costs and improved employees benefit packages.
As your company prepares for your benefits renewal this year, what are you doing differently this year to break the status quo?
How is your company reducing healthcare costs by re-engineering your medical plan with proven risk management strategies? Are you just meekly accepting the 4 – 5 percent increase because your Broker told you it’s in line with the trend for this year? However, don’t forget the last three previous years when you received 8 – 12% increases.
Don’t settle for another “status quo” benefits renewal.