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Reasons for Consideration 2012-06-30T19:42:22+00:00

Reasons for Consideration

  • The employer can customize the plan to meet the specific health care needs of its workforce, as opposed to purchasing a “canned,” “one-size-fits-all” group insurance policy. This includes both its out-of-pocket maximums spent on claims and any contributions by the insured party.
  • Employers with as little as 30 covered employees and with healthy cash flows can consider such arrangements.
  • The employer maintains control over the health plan reserves, enabling maximization of interest income that that would be otherwise generated by an insurance carrier through the investment of premium dollars.
  • There are products attached that may alleviate some of the uncertainties of extraordinarily high contribution in any one period, toward employer out of pocket claims. These usually are provided through Third Party Administrators (TPA’s) or re-insurers that provide “stop-loss” coverage beyond a set amount per covered person and in total aggregate for any one company.
  • The employer does not have to pre-pay for coverage, thereby providing for improved cash flow.
  • The employer is not subject to conflicting state health insurance regulations/benefit mandates, as self-insured health plans are regulated under federal law (ERISA).
  • The employer is not subject to state health insurance premium taxes, which are generally two to three percent of the premium’s dollar value.
  • The employer is free to contract with the providers or provider network (s) best suited to meet the health care needs of its employees. Unlike traditional insurance, a self-insured plan can have multiple networks and not just one.
  • Over time, with experience of the insured individuals, various benefits and incentives can be built into the insurance provided. Wellness benefits, even cash rewards for health lifestyle activities or support for fitness can be part of these programs.
  • Without an approximate 20% of traditional premium going to the insurer to cover overhead and profit, notwithstanding third party administrator costs (TPA) and stop loss reinsurance, it is not out of the question a self-insured employer or its employees may see a profit or returns of contribution returns.
  • Wellness programs count, whereas such programs seldom are factors in traditional health policy underwriting, since a healthier workforce translates into lower claims reimbursement.