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  • Health spending has steadily increased over the last few years, making health insurance one of the most highly prized employee benefits. Employer-provided health care plays a crucial role in recruitment and retaining top talent. In an era where employees are increasingly open to changing jobs, businesses are reassessing the benefits they offer, including health insurance – however, not all health plans work the same way.

    Group health insurance varies in terms of how the insurance is purchased and how it affects the group’s premiums and plan options. If you’re looking for ways to navigate your options, we’ve compiled a few of the most popular plans available.

    Group Health Insurance Options

    While all health plans have their pros and cons, it’s up to you to decide which makes the most sense for you and your employees’ needs. The following are common types of group health insurance options available for small businesses.

    Fully Insured Plans

    A fully insured plan is one of the more traditional types of group health insurance. Fully insured plans involve the insurance company taking on the risks involved with health care costs. Your business is then charged an annual premium for the benefits in the insurance policy, which is partially paid for by the employees.
    The insurer uses a variety of factors to calculate group health insurance premiums, including:

    The insurer uses a variety of factors to calculate group health insurance premiums, including:

    • Size and health of the group
    • The average age of the group
    • The employer’s claims history
    • Types of occupation
    • Level of coverage and add-on benefits

    Self-Funded Plans

    While the insurance company covers employee health costs in a fully insured plan, self-funding burdens the employer. In a self-funded plan, you’ll pay for employees’ health care claims and administrative costs directly rather than paying fixed premiums to an insurance company. This can often lead to more affordable rates and more control over your plan, with the tradeoff of your business accepting the risk of paying for catastrophic claims.

    The potential risk is why self-funded plans are more prevalent among larger companies and organizations that can easily absorb fluctuations in health care costs and want more control over their benefit offerings. However, small groups can also take advantage of self-funded plans. Small businesses can opt for a partially self-funded plan if they have a financial buffer or stop-loss insurance. This option allows small businesses to reap some of the benefits of self-funding while limiting risk.

    Level-Funded Plans

    Level-funded plans strike a balance by merging elements from fully insured and self-funded models. They’re an excellent fit for smaller businesses that might need more time to embrace the risk of a self-funded plan but are prepared to step away from fully insured premiums. They offer cost-saving potential and greater control compared to fully insured plans while still providing financial predictability.
    Unlike traditional plans with annual premiums, level-funded options are charged at a monthly payment rate. Insurance carriers will use census information to determine the amount your small group should pay. This rate is based on factors such as claims allowances, fees, and stop-loss coverage premiums. At the end of the year, the carrier will adjust the monthly level based on group performance.
    The employer is typically refunded if there is a surplus in the fund due to lower-than-expected claims. This approach allows small businesses to manage costs efficiently and consider a future transition into a self-funded plan.

    Health Maintenance Organization (HMO)

    An HMO is a group coverage setup where members pay for specific health services through monthly premiums. These plans prioritize cost-effective and comprehensive health care services for their members. With an HMO, you gain access to a designated network of health care providers and facilities, but your coverage is typically limited to services within this network. This focus on in-network care makes HMOs more affordable than other health insurance plans. However, seeing any physicians or facilities not included in your HMO network can result in a group member having to foot the entire bill.

    Preferred Provider Organization (PPO)

    PPO plans are like HMO plans, except with more flexibility. Like HMOs, PPOs also maintain a network of preferred health care providers, encompassing doctors, hospitals, and specialists. However, what sets PPOs apart is the freedom they grant their members. PPO members can choose to receive care from within the in-network providers or venture outside to out-of-network providers without having to cover the entire cost themselves. Instead, these visits will result in higher co-pays and additional service costs, giving members more freedom than HMO plans.

    High-Deductible Health Plan (HDHP) With A Savings Option (HDHP/SO)

    An HDHP is based on lower premiums and higher deductibles for group members. This means that members with this type of health care insurance will have to pay more out-of-pocket before the plan pays for its share. The tradeoff, however, is that this route allows monthly premiums to be lower, making it a good group health insurance option for employees who don’t use many medical services.

    In addition, you can pair HDHPs with savings options such as a health savings account (HSA). These accounts allow members to make tax-free contributions to an account that can be used to pay for health care costs, ranging from co-pays to primary medical services. The funds in these accounts roll over every year, making them a great retirement savings option, too.

    Health reimbursement accounts (HRAs) are another potential savings option that can be tied to an HDHP. These accounts are similar to HSAs, except employers make the contributions instead of employees.

    Choosing The Right Type Of Health Insurance For Your Small Business

    Finding the right group health insurance plan for your budget can be difficult. Balancing benefits administration and budgets can be overwhelming for anyone without a firm grasp of the health care system.
    That’s why many small business owners work with a professional employer organization (PEO) to help weigh their group health insurance options and handle the administrative burden of health care coverage. Whether your organization lacks an HR department or simply needs a resource to make more informed decisions about the management of benefits, GMS is here to help.

    GMS changes the approach to increase affordable options and give your employees access to small business health insurance. We give small businesses the buying power of a large corporation. Contact GMS today to speak with one of our experts about how we can help you offer quality healthcare plans that work with your budget.

  • Considering the recent healthcare regulations, now is a better time than ever to consider a self-funded health plan. Self-funding your health insurance is a long-term strategy to save money, gain total control over your plan, and may offer immediate savings.

    It is a common misconception that self-funded health plans are only advantageous for large employers. In a traditional self-funded arrangement, small employers weren’t able to absorb the risk of becoming self-insured due to potential losses. By self-insuring your plan coupled with a stop loss policy (also known as a catastrophic policy), you mitigate your financial risk while allowing your plan to reap all benefits. Stop loss policies allow employers to evaluate potential savings and maximum exposure by becoming self-funded. Prior to stop loss insurance, the potential savings were estimated, and max exposure was unknown.

    Group Management Services offers stop loss insurance that allows small employers to be rated on their own medical applications while experiencing savings due to our economies of scale. This means we can offer lower stop loss premiums due to our volume, but your premiums aren’t affected by other plans should they not do as well as yours.

    Image of a business owner who switched to a self-funded health insurance plan.

    Various Benefits Of Self-Funding

    • Transparency. Self-insuring allows employers to view all costs paid by the plan.  These costs include fees for administration, broker, network access, and actual claims data. This knowledge allows employers to accurately evaluate their costs, and identify the areas they can potentially save more money.
    • Tax. Self-insured plans are not subject to premium taxes. 
    • Use of capital. Rather than paying your monthly premium to a fully insured carrier, self-funding allows you to hold a good portion of this capital. Let’s say your plan has an annual premium of $250k with your fully insured carrier. By switching over to a self-funded plan, your total annual premium costs have now decreased to $60k with a max claim liability of $180k. This means you are now only paying $5k monthly in premium (instead of $20k with your current carrier), and funding claims up to a max total of $180k throughout the year. Since your max out-of-pocket by being self-funded is only $240k (premium plus claim liability), you’re already guaranteed to save $10k. The $180k in claim liability stays in your bank account, allowing employers to utilize this capital until needed to fund claims.
    • Pay only for actual claims; not the total expected claim level from a fully insured carrier. On a fully insured plan, you know you’re paying the total monthly premium regardless of claim experience. If your self-funded plan runs extremely well throughout the plan year, any amount left over in your claim liability is additional savings to the plan. If your plan only experiences $120k in claims, the $60k left over in the claim fund is additional savings for your plan. Does your fully insured carrier offer you a refund at the end of a good plan year? If they do, are they keeping a percentage of your savings?
    • Limit the surprises. Fully insured plans don’t typically notify the employer of high claims until the renewal period. By that point, you can anticipate a heavy increase due to claim experience. Self-insured plans allow for employers to be notified of plan expenses on a weekly basis throughout the year. This is extremely valuable for plans to know if an early renewal is beneficial and other options to assist the employer and the members.
    • Let us share the risk. By offering stop loss insurance on your plans, GMS has every incentive to properly monitor your claim volume and accuracy. We are responsible for reimbursing your plan for all claims paid over your maximum liability. Therefore, we work closely with employers and their members to keep costs in line. 
    • Tailor the plan design. Self-funding allows employers to decide what plan options are most advantageous for their members without having to pay for unnecessary add-ons.

    Enjoy the Benefits of Self-Funding

    Self-insuring your health plan provides a copious amount of advantages, allows you to effectively evaluate costs, and offers substantial savings. The figures used in the example provided are from an actual proposal to one of our clients. Don’t take my word for it; the numbers speak for themselves. Contact us today to speak with our experts to learn more about a self-funded plan. 

  • With the waters of healthcare becoming murkier every day, employers and employees abdicate many of the cost-auditing responsibilities regarding their healthcare to their insurance company. Unfortunately, placing this level of trust in your company’s health insurance carrier leaves the proverbial fox to mind the hen house.

    Those who purchase health coverage through a commercial provider mistakenly believe their insurance company is actively advocating for them and monitoring the costs incurred for healthcare services. While this is far from the case, the shocking part of this reality is that the insurance companies are forcing you to pay more than you should for your company’s coverage.  

    Benefits of Self-Insured Plans

    A self-insured health plan can reduce healthcare premiums for your small business by reducing overhead and other management costs charged by big insurance plans. When you have a third-party administrator like Group Management Services manage your self-insured plan, you ensure your employees receive everything promised to them in their plan and limit you from spending more money than anticipated. 

    Negotiate prices: Insurance companies are billed by the hospital based on what the hospital thinks they should charge for their services. On the other hand, TPAs look at what the hospitals pay Medicare – which is often considerably less than what the hospital would bill to an insurance company – and negotiate healthcare costs from there. This can have significant impact on healthcare costs (in your favor). To learn more about this business model, I encourage you to read this article from the New York Times about the “$1,000 toothbrush.” 

    Eliminate Price Secrecy: The practice of provider and hospital consolidation in the marketplace creates an uneven playing field for insurance companies to negotiate true cost-savings for their members. A TPA like GMS will underwrite a custom policy for your group so you don’t pay for coverage that the group doesn’t need and monitors all claims to reduce your financial risk. 

    Audit bills: TPAs have the resources and knowledge to help your employee check each bill to ensure there is no double billing for equipment or health care services. A TPA can challenge prices for services that are beyond “reasonable and customary,” substantially reducing patient bills and keeping your claims down.

    Employee peace-of-mind: With the changing landscape of healthcare, you can assure your employees have job security along with quality and affordable health coverage. A TPA’s main concern is you and your employees, ensuring a more personable and attentive service experience. 

    Increased cash flow: Self-insured plans managed through a TPA brings the control of processing of health claims back in-house, minimizing losses and reducing administrative costs. 

    Self-insured plans through a third-party administrator like GMS can give you more control of your coverage and help cut costs, while still providing quality coverage to your employees. Interested in how a self-insured plan could help your business? Get a quote now or speak with one of GMS’ TPA experts. 

  • 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.

    Image of a business owner considering self-funded health insurance through TPA services.

    Myth No. 1: Self-Funding Will Sink Small Businesses

    Some business owners remember stories about a company sinking because they went self-funded. What essentially would happen is that a business with self-funded insurance would run into a large number of costly claims after one or several employees got really sick. Because they were self-funded, the business would theoretically be stuck paying all of those claims without any help from a provider, which would force them to shut down since they wouldn’t have the cash flow to actually run their business and pay their other bills.

    While businesses back in the ‘70s and ‘80s did run into this problem, times have changed. Businesses can now invest in something called stop-loss insurance to manage their risk and set a maximum liability number for their yearly claims. 

    Stop-loss insurance allows a business to mitigate its liability so that it can self-fund its insurance without having to fear a year with an unexpected number of claims. Let’s just say that your business is given a $10,000 monthly maximum through stop-loss insurance. At the end of the year, that’s $120,000 max. If your business exceeds $120,000 in claims in a year, you’re reimbursed the overage by the reinsurer.

    This policy also works in your favor if you have fewer claims than expected. If you don’t reach your maximum claims liability number, you simply get to keep the difference, or you can take advantage of a “premium holiday.” This allows you to use the refund to pay for one or several insurance premiums in advance. Since the refund could affect your tax filings, this option can help you avoid having to do a tax adjustment on your healthcare fees since we’ll just deduct your refund from the premiums for the following year.

    Myth No. 2: Self-Funding Makes Owners Deal with Several Moving Parts

    As we’ve mentioned before about self-funding, “normal businesses with fewer than 5,000 employees won’t have the infrastructure to comply with all the regulations and make it financially feasible.” Managing a self-funded plan can mean carefully overseeing several important moving parts. This means that you’re going to need some help because self-funding can be a lot of work for whomever oversees their HR.

    While some owners may be scared off by self-funding, there’s a simple solution to these moving parts: a TPA. What we can do as a PEO with TPA services is manage everything in house so that you can benefit from self-funding without having to deal with all the regulations and administration needs, which can include: 

    • Electronically sending out a file on health plan eligibility every day
    • Having an in-house programmer who can receive necessary data files
    • Access to a pharmacy benefits manager, who works with pharmacies on plan eligibility and drug costs

    Those are just a few of 30 moving pieces that are necessary for self-funding. When you work with a TPA, we can be as transparent about this process as you’d like so that you can see how everything works, or you can let us take care of the work while you focus on other important matters. Regardless of how much or how little you want to know about the process, a TPA enables you to take the HR work out of your hands. This way they can sign up for self-funding, pay their premiums, and know that the work is being done for them.

    Using TPA Services to Self-Fund Your Business

    The key to a good self-funded plan is a TPA that can take care of all the moving parts for your business. As a Professional Employer Organization that offers TPA services, Group Management Services can allow you to enjoy the benefits of self-funding while managing your plan. Contact GMS today to talk one of our experts to learn more about self-funding and to get a quote for your business.

  • 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.

    Image of a third-party administrator for a small business.

    How Does the TPA Process Work?

    While some people refer to TPAs as “claims payers,” the role a TPA plays is much more intricate than that. Let’s start by imagining that your business is going from a fully-insured carrier to become self-funded. In this instance, the business owner is  now the plan fiduciary, which just means that they are financially responsible for the plan.

    Since you’re now self-funded, there’s no insurance company anymore, and you rent what is called a PPO network. For example, GMS primarily works with Cigna. These networks have a long list of providers and hospitals in their network and negotiate discounts with each of these groups. You then pay your network a set cost per employee, per month so that they have access to these discounts.

    This is where the “claims payer” name comes into play. When members of your plan go out and generate insurance claims, those claims go directly to your TPA. The TPA then administers these claims to tell providers who’s eligible on the plan, processes them, and bills the client for monthly fees and the amount of money that needs to be paid to these providers.

    Do I Need a TPA if I want Self-Funded Insurance?

    Absolutely. While a Google-sized company can afford to have an in-house TPA, normal businesses with fewer than 5,000 employees won’t have the infrastructure to comply with all the regulations and make it financially feasible. A TPA gives you access to a team of people who can handle the day-in, day-out needs of self-funding, which can range from daily electronic filings of plan eligibility to a pharmacy benefits manager who deals with every prescription one of your members has filled.

    There are also the potential financial ramifications of managing self-funded insurance in-house. The right TPA can offer you stop loss insurance to mitigate your liability. As GMS’ Costas Reamensnyder points out, a self-funded health insurance plan allows you to “pay only for actual claims; not the total expected claim level from a fully insured carrier.” This means your plan can save a substantial amount of money each year. . A TPA can help you set a cap for maximum liability, which means that you can properly budget for your plan and cover yourself from unforeseeable circumstances.  This maximum liability is provided by adding a stop loss insurance policy. It essentially mitigates your financial liability by limiting the plan’s maximum exposure.

    The PEO TPA Connection

    If interested in self-funding your health insurance, GMS can help. As a Professional Employer Organization, we can help business owners in a variety of ways, including our TPA services. Contact GMS today to talk to one of our experts about self-funded health insurance for your business. 

  • Health insurance is one of the most sought-after employee benefits, but not all health plans work the same way. There are several different types of group health insurance that differ in terms of how the insurance is purchased and how it affects the group’s premiums and plan options.  

    What Is Group Health Insurance? 

    Group health insurance is a type of health care coverage that’s provided to a group of individuals, typically employees of a company or members of an organization. This form of insurance means that all members of the group are covered under one policy. As opposed to individual insurance policies, where each person’s risk is assessed individually, group health insurance allows for the pooling of risk across all members. This often results in more favorable premium rates for the entire group. 

    One of the key advantages of group health insurance is that it can provide coverage for individuals who might otherwise struggle to obtain insurance on their own due to cost or pre-existing conditions. Employers or organizations purchase the policy and offer it to their members, often extending the coverage to include dependents. 

    Benefits Of Group Health Insurance

    Group health insurance offers numerous advantages for both employers and employees. For employers, it’s a powerful tool for attracting and retaining top talent, as it demonstrates a commitment to the well-being of the workforce. Employees benefit from lower premiums and better coverage options, often with pre-existing conditions covered. The buying power of a group ensures more comprehensive coverage at a reduced cost. In addition, group health insurance plans contribute to a healthier workplace, leading to a reduced absenteeism and increased productivity. Overall, it’s a win-win situation that fosters a supportive and healthy work environment. 

    Group Health Insurance Options

    While all these health plans have certain advantages and disadvantages, it’s up to you to decide which makes the most sense for your needs. Here are some of the common types of group health insurance options available for small businesses.

    Fully-Insured Plans

    Of all the types of group health insurance, the fully-insured plan is one of the more traditional options. Fully-insured plans involve the insurance company taking on the risks involved with healthcare costs and charging your business an annual premium for the benefits in the insurance policy, which is partially paid for by the employees. 

    The insurer uses a variety of factors used to calculate group health insurance premiums, including:

    • Size and health of the group
    • Average age of the group
    • The employer’s claims history
    • Types of occupation
    • Level of coverage and add-on benefits

    Self-Funded Plans

    While the insurance company covers the expense of employee health costs in a fully-insured plan, self-funding places that burden on the employer. This can often lead to more affordable rates and more control over a plan, with the tradeoff of your business accepting the risk of having to pay for any catastrophic claims. 

    This path is often seen as an option for large businesses, but small groups can also take advantage of self-funded plans. Small businesses can opt for a partially self-funded plan with stop-loss insurance. This option limits your risk so that you can still reap some of the benefits of self-funding without taking on the entire burden in case any catastrophic claims occur.

    Level-Funded Plans

    Unlike the more traditional plans with annual premiums, level-funded plans are based on a monthly payment rate. Insurance carriers will use census information to determine the amount your small group should pay. This rate is based on factors like claims allowances, fees, and stop-loss coverage premiums. Once the year is finished, the carrier will adjust the monthly level based on group performance.

    Health Maintenance Organization (HMO)

    An HMO is a group coverage setup where group members pay for specific health services through monthly premiums. Through an HMO, you’ll have access to a network of healthcare providers and locations, but services will be limited to those that fall under that network. This arrangement allows HMOs to be more affordable than other types of health insurance plans, although seeing any physicians or facilities not included in your HMO network can result in a group member having to foot the full bill.

    Preferred Provider Organization (PPO)

    PPO plans are like HMO plans, except with more flexibility. PPOs feature a network of healthcare providers and facilities, but group members have the option to go to physicians or locations without being completely on the hook for the entire bill. Instead, these visits will result in higher co-pays and additional service costs, giving members some more freedom than HMO plans.

    High-Deductible Health Plan (HDHP) with a Savings Option (HDHP/SO)

    An HDHP is based around lower premiums and higher deductibles for group members. This means that members with this type of healthcare insurance will have to pay more out-of-pocket before the plan pays for its share. The tradeoff, however, is that this route allows monthly premiums to be lower, making it a good group health insurance option for employees who don’t use many medical services. 

    In addition, HDHPs can be paired with savings options like a health savings account (HSA). These accounts allow members to make tax-free contributions to an account that can be used to pay for healthcare costs, ranging from copays to major medical services. The funds in these accounts rollover every year, making them a great retirement savings option, too.

    Health reimbursement accounts (HRAs) are another potential savings option that can be tied to an HDHP. These accounts are similar to HSAs, except employers make the contributions instead of employees.

    Choose the Right Type of Health Insurance for Your Small Business

    It can be difficult to find the right group health insurance plan for your budget. Balancing benefits administration and budget can be overwhelming for anyone without a strong grasp of the healthcare system. 

    That’s why many small business owners work with a Professional Employer Organization (PEO) to help weigh their group health insurance options and handle the administrative burden of healthcare coverage. Contact GMS today to talk to one of our experts about how we can help you offer quality healthcare plans that work with your budget.