Self-funded TN health plans for small groups
Self-funded health insurance | A small TN companies answer to big rate increases?
The Affordable Care Act (ACA) is changing the way small groups buy health insurance in Tennessee and across the country. In some ways it's easier to understand, compare and purchase a health insurance policy. The rules like community rating and guarantee issue allow everyone to buy the same policy for set prices based on their location and age. This is a great thing for some but it can be punishing for those who have a primarily younger and healthy workforce.
As we work through insurance solutions for our group clients we are finding very few creative ways to work around the ACA mandates that require EHBs and the high cost of providing them. Self-insurance is one solution that has been used for years by larger companies that is moving into the small group market.
Self-insurance for small groups
Change brings about innovation and that's what is happening in the small group marketplace. Several insurance companies are bringing self-funding down to groups of as little as 10 employees. Sounds risky you say? The protection they are building into these plans makes them look and act like the fully insured products companies are accustomed to. The administrative chassis of these policies is simply breaking down the health insurance components (administration, stop loss & claims funding) and making them work as a self-funded product.
This strategy will really only work for healthy groups as you have to go through underwriting and your final rates are based on the risk of your specific employees and their dependents. There are many very healthy companies who have been subsidizing the unhealthy for years, finally they have a chance to be responsible for their own claims and reap the savings of a healthy workforce.
Self-funding advantages for Tennessee employers
- Pay for your groups actual claims “ at PPO discounts
- Know where all your healthcare dollars go “ Complete reporting down to the penny
- Offer the same heath plan across stateliness if you have multiple locations
- Plan design flexibility “ Build the health plan you and your employees want
- Eliminate renewal surprises “ You know your claims and can anticipate your renewal
- Claims running great “ It's your money you are saving
- No requirement to offer 10 essential health benefits
- No health insurance taxes or fees ( you do pay PCORI and Transitional reinsurance fees
Self-funding can be too risky for a small company
In the past this was a true statement. Today there are multiple protections in place to protect you from large claims and the funding responsibility that can happen early in the plan year. In some cases you are only responsible for your regular monthly premium, regardless of how many large claims you have. Self-insured plans were tricky to get out of in the past as well. While you are committed to staying with the carrier for the full 12 months, run out and terminal liability are calculated into your rates so you are off the hook if you do leave. Different carriers and plans each have their own rules so it's very important to compare and understand how they work. In the right situation this is a win/win for the employer and your employees.
Have questions? We can help call us today for solutions to your group insurance challenges 615-724-1699