February 21, 2017
With the constant conversation of healthcare in the news, health benefits have become a mainstay discussion for most Americans. Benefits are becoming more and more important in recruiting and retaining top talent and business owners are searching for ways to continue offering competitive benefits.
I have found this is even more troubling to the small to midsize business owners. Healthcare continuously ranks in the top 3 expenses for employers of all sizes, not just large companies. This has caused business owners to start to look at alternative solutions to providing healthcare for their employees. While there are many solutions in the market one of the most popular is self-funding. Self-funding in itself can be a scary word for most employers. In the past self-funding was for larger companies, but this has changed with time and many small employers have migrated to self-funding.
- Self-funding gives you predictability, control, protection, speed, flexibility, and savings potential.
- Small employers who are used to seeing renewal after renewal with 10-15% premium hikes without justification; self-funding may be right for you.
- Small and midsize companies looking for the same pieces of information that a large company gets; self-funding may be right for you.
While all this sounds attractive for small and midsize business owners, cash flow can be a tricky subject. In traditional self-funding arrangements this could’ve been an issue causing the companies to remain fully-insured in the past. Today, there are contracts in the market that allow the employers to take the rollercoaster effect of claims out of the picture. I refer to the concept as level-funding. With level-funding, an employer pays a fixed amount per month similar to a fully-insured scenario. The difference for an employer is 100% of the claim funds not used at the end of the contract is theirs to keep. This is a great scenario for the employer because they not only get the benefits of self-funding, but are protected from cash flow issues. Most importantly in a good claims year the employer retains the reserves.
The conversation of healthcare cost is not going away; we need to turn to looking at solutions that are outside of the norm. Introducing different financing and management strategies for healthcare can help you take back control of your benefit plan expenses. If you have been facing these issues, please reach out to Unified and learn more about the solutions that we offer.
Unified Group Services, Inc.