When it comes to finding the right health plan for your business, the key is to find an option that makes sense for your business. One route that a business can go is to invest in TPA services for a self-funded health plan, which offers several benefits that can help owners save money and mitigate their risk with proper planning and support. Self-funded insurance also allows businesses to avoid some of the increased regulations on healthcare, which is a big reason why more small and midsize employers are choosing to self-insure, according to the Society for Human Resource Management.
With all that in mind, self-funding sounds like an intriguing option, right? However, there are a pair of misconceptions about self-funding that either dwell in the past or are not that relevant to business owners. Here are two reasons why owners avoid self-funding, and how a TPA can dispel those arguments.
Escalating costs of healthcare and benefits have led business owners across the country to seek out a solution that makes the most sense for their company. Of the many options out there, self-funded health insurance has become a realistic opportunity for many small businesses thanks to third-party administrators.
These organizations, also known as TPAs, allow business owners to take advantage of self-funding, which can provide a “greater level of flexibility that comes with being able to tailor the plan to their needs,” according to the Society for Human Resource Management. The self-funding process can be complicated, but a good TPA can simplify the process so that employers can reap the benefits of self-funded insurance without having to deal with the risks of managing it themselves.
When the Affordable Care Act passed in late 2010, one of the major tenets of the plan was the creation of healthcare exchanges in every state. These exchanges would be state-run with federal seed money used to create them. People who didn’t have coverage or had unaffordable coverage through their employers would be able to buy subsidized plans at a comparatively low cost.
The exchanges began with the implementation of the ACA in 2014. Of the 50 states, 23 of them were run by the federal government. In late 2015, it was reported that 12 of the 23 federally-run state exchanges were shutting down due to unsustainable losses. In some areas, things have gotten worse.
In the business world, everyone is always looking to maximize profitability. It’s not because business owners are greedy trying to grab every last dime. It’s because they are working their tail off to either make the business succeed or make it grow.
In their efforts to do so, business owners look to control what they can, especially when it comes to costs. As a salesperson, I have often been the person who they tried to control costs through by either beating me up on price, extracting extra services or using what my company does to help make them more profitable. However, it often seems to come back to controlling costs.
When a business owner thinks of controllable costs, they often think of material prices, employee hours or something else on the production end. What seldom comes into play is controlling workers comp, healthcare and unemployment costs. But, how can you control those costs? Those things are completely out of a business owner’s control. Right?
Imagine you’re the CEO of a company with 49 employees. You’re currently covered through a fully insured health plan, but are considering switching to a self-insured group plan due to the potential premium increases resulting from the Affordable Care Act.
All of the companies you know with self-funded plans are larger companies (250+employees), so you aren’t sure if this is the right solution for you. You’re also concerned that since you would pay self-insurance claims directly, your company could be liable for a major claim if an employee has a serious health issue.
What do you think - what would you do in this situation? Before you make a decision, consider the following key points.
What happens when you have a major claim on a self-insured policy?
How healthy are your employees? If you are a small business owner looking to save money on your healthcare, let’s hope they are all vegetarian non-smokers training for a marathon, right?
While that would be great, for your small business what matters more for your bottom line is the type of healthcare plan you provide. You have two choices: a fully insured plan or a self-insured plan.
The news channels are flooded with updates on the trials and tribulations of the Affordable Care Act's website and accompanying registration process. Politics aside, the implementation of this piece of legislation could mean big changes and larger financial challenges for your health benefits plan.
Most small business owners today are able to provide some form of health insurance coverage for their employees through large commercial healthcare plans. However, with the Affordable Care Act, these plans will come at a cost for business owners. In fact, Ohio businesses are expected to see a 71% increase in these premiums.
These high increases may force you to reduce or eliminate the health benefits you are able to extend to your employees, forcing them to buy insurance from the government’s healthcare marketplace.
In 2014, small group health insurance premiums in Ohio are expected to increase by 71%. As a business owner, you know that healthcare is already a significant expense, and increases like this are likely keeping you awake at night, wondering how you can keep employees insured AND pay the bills.
Fortunately, you can start sleeping better again, because Group Management Services has a completely unique and customizable solution that enables you to provide the coverage your group needs while limiting your expenses and business risks associated with healthcare coverage.
To give you an idea about how GMS can do this, let’s first take a look at how small and medium-sized businesses are covered today: fully insured plans.
My two older boys, ages 9 and 10, are playing ‘kid pitch’ baseball this year. Believe it or not, when I asked them what position they wanted to play, they both said “Dad, I want to be the pitcher”.
Then we asked each player on the team what position they wanted to play and each and every player said “Pitcher”. On paper this is not strange, as this is the most glorified position in baseball. After all, they make the most money, get the most publicity (when they are good), and seem to have the biggest fan base.
The other coaches and I talked to our 13-man roster about how important every position is on the team and how every position contributes to the overall goal. We teach them that they all have to play together to win.