Health & benefits Three common misconceptions about self-funding

Health benefit management options

Three common misconceptions about self-funding

by Tara Byrd, CIC, Employee Benefits Consultant, Snellings Walters Insurance Agency

Gerd Altmann on Pixabay

Every year, employers have to make tough decisions on what health insurance plans to choose and what benefits to offer their

employees. While the process is stressful, most employers are not aware of alternative solutions and have even been misinformed.

In fact, a lot of companies are not even aware that selffunding is even an option. And if they are aware, it is possible they have heard incorrect information about it. This misinformation can keep employers from exploring better and cost-effective ways to manage their health benefit plans. Here are three common misconceptions when it comes to self-funding:

Only big companies have self-funded plans.

In the past, that was true. However, that is not accurate anymore and there are many programs out there with self-funded plans. Many carriers have created a model where the scalability to go self-funded doesn’t have to be thousands and thousands of employees anymore. So if your company has 100 or more employees, it’s actually a great opportunity to evaluate to see if it’s a good fit for you.

Self-funded plans are too risky.

The term “self-funded” can sound scary. However, the truth is you do have re-insurance behind the scenes to protect you from any catastrophic claimants. Those are things that no one can predict, so there’s insurance to buy that can protect you from that. The difference is that you have more control over your plan and have more exposure to what those costs actually are. The reality is whatever claims are on the plan will continue to be on the plan, whatever model you are in.

My company’s claims are too bad to have a self-funded plan.

That doesn’t really matter. What matters more is what model protects you more in the bad years. Statistically speaking, one of every five years is a bad claims year for employers. What model is going to protect you the best in that bad year? Getting into a model that protects you and your business better for those larger claims is the most important.

If you are curious about self-funding, we would love to have a conversation with you.

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About the author

Tara Byrd, CIC is an Employee Benefits Consultant with Snellings Walters.

E: tbyrd@snellingswalters.com P: 770-268-3688 W: snellingswalters.com

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Snellings Walters is the official insurance partner of the Georgia Urban Ag Council.