Self Insuring-Why Bother?

Self-Insuring, Why Bother

By Christopher Nunnally, LIA

Chris Nunnally is an Account Executive with Group Benefits Strategies.

Chris has been working in insurance and benefits his entire career. He was formerly the Director of Broker Sales for Teladoc. Prior to that, he was a Sales Representative for Sun Life Financial and New York Life where he gained extensive knowledge of Employee Benefits and Stop Loss Insurance.

Most employers have an understanding of what self-insuring their medical cost involves. But let’s take a look at why company self-funds. What does it mean for their employees? 3 out of 5 American workers are currently being covered by employer-based self-insured health plans. By 2020 nearly 35,000 companies will join the employers that already self-fund their health care cost.

Most employees have no idea they are covered by a self-insured plan. From the outside, a self-funded health plan looks like a traditional health plan. Weekly or bi-weekly deductions from their paychecks go towards health insurance premiums. They go to the doctor or pick up a prescription and pay a copay. For most employees, that is the extent of the interaction with their health insurance plan. However, a self-insured health plan can be so much more.

A self-funded health plan has the ability to be at its strongest when a member is at their most vulnerable. Self-insurance, when done correctly, is a living, breathing apparatus a company uses as a means to take care of their employees. A company has the ability to contract with vendors to help manage the most complex diseases empowering the insured to live a more independent, productive and happy life. For example, personal cancer case managers can help guide cancer patients to better outcomes. Telemedicine is a tool a single parent can use late at night for a sick child, and avoid having to pack up all their kids and drive to the emergency room. Employers can build a high performance health plan that meets the needs of their employees and fits with the culture of the company. A self-insured plan has the opportunity to empower its members to live happier healthier lives.

Members’ health and happiness and over-all well-being are why a company should consider self-funding their health care cost.

Mitigating cost is just the byproduct.

For more information on self-funding, contact GBS today.

Importance of Plan Modeling

Importance of Plan Modeling

Changing plan designs is an incredibly tough decision for an employer. It’s hard to know how changes will impact the overall budget. However, sometimes plan design changes are necessary to manage costs, particularly when cost drivers could be reined in by adjusting plan specifics.

Employers also need to consider how plan design changes will affect current and future employees—providing a quality benefits plan is of vital importance to attract and retain quality employees.

The best solution to this problem is to engage in plan modeling. Plan modeling allows managers to determine the best use of resources and to engage in experimentation without taking on risks.

Plan modeling makes it possible to ask various questions regarding how claims would have been paid differently given a modified design.

Many employers start this process by looking at historical claims data and conducting claims analysis to identify problem areas in their health plans. With the results of the analysis, employers can explore potential solutions for lowering costs. (For instance, if emergency room costs were disproportionately high, an employer could consider raising the emergency room copay.)

Even if you are just thinking about making plan design adjustments because you suspect it would drive better claims results, the use of modeling can help you test-drive those changes before implementing them. The results of the modeling will help you see the outcome of suggested changes to your current benefit structure.

Some of the types of decisions plan modeling allows employers to see beforehand include:

  • Deductible and coinsurance structure
  • Office visit vs. specialist copay
  • Urgent care vs. ER copay
  • Different model of health plan (experimenting with an HSA plan, for example)
  • Prescription drug tiered rate structure
  • Increased efforts at utilizing preventive care

With access to all the data provided by plan modeling, employers are able to uncover ways to help control costs. By viewing how much money new strategies have the potential to save over time, employers eliminate the risk of benefits missteps, like implementing drastic changes to popular benefits offerings. With these data points, an employer can make educated, strategic decisions that balance its financial benefit with its employees’ needs. Some models even illustrate how many employees will be affected by each change, allowing employers to truly balance value and cost.

For most employers, identifying and managing even just a fraction of their costs can generate significant savings. That’s because the smallest percentages of identified high-spending areas represent the most promising potential for savings.

The better the model, the greater the potential for cost savings. The more models employers run, the more likely they’ll find hidden ways to curb benefits costs. Employers are free to consider novel and cutting-edge changes to employee benefits without having to wait until after implementation to measure success. In a burgeoning, costly area where employers are trying to limit expenses, plan modeling programs are essential.

Contact Group Benefits Strategies for more information on how to put plan modeling to work for your office.