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The Blueprint

Should You Self-Fund?

As the cost of health insurance continues to grow higher, securing a stable health plan for employees while cutting costs becomes more and more of a necessity. One way that employers have found to go about this is self-funding—taking on the health insurance plan (and associated risk) themselves. The potential savings and benefits of self-funding are attractive, but it’s important for employers to consider every angle.

So, the question stands: why should employers consider self-funding for their businesses?

Self-Funding & Your Bottom Line

One of the stronger considerations for self-funding is cost—or the lack of it. With a fully insured health plan, an employer pays their health insurance company a fixed amount in premiums each month. The insurance company then covers the cost of the employees’ claims. This results in lower risk to the employer overall, since they know what the plan will cost each year, and they are protected against catastrophic claims. However, that also leaves the employer to manage a huge expense that rises each year, without any potential for reimbursement, regardless of how much they incur in claims expense.

Self-funding gives employers the opportunity to pocket the money saved if the plan performs well, resulting in greater savings. Instead of paying a higher amount to the insurance company that employees might not even use, self-funding allows for lower costs and creative control over managing their plan’s healthcare costs.

Risk vs. Reward

There is, of course, still the matter of risk—if an employer using a self-funded plan does have employees with incredibly costly medical bills, it can quickly spell trouble. For most employers, the idea of taking that risk on is a deal-breaker. But that’s where RMTS comes in. Our medical stop loss provides a safety net that gives employers the comfort of knowing they are protected while still enjoying the benefits of being self-funded.

If an employee’s medical costs reach beyond a certain set point (specific coverage) or the company’s total claims amount adds up to a certain threshold (aggregate coverage), we cover the rest, so employers aren’t stuck managing that cost on their own. With a full range of stop loss policy options with strictly A rated carriers, RMTS ensures employers aren’t exposed to that risk.

Bespoke Benefits

Aside from the typically higher costs of fully insured coverage, many groups opt for self-funding because of the value that comes with customized benefits. While many insurance providers stick to the mold with their benefits packages and available networks, a self-funded group has much more freedom to tweak their benefits to their members' specific needs.

Plus, self-funded groups also have much more control over their health data, which is especially helpful for designing a customized benefits package. For example, if a significant portion of members at a company are at risk for a certain health condition, then the employer can work with a TPA to offer more benefits for that condition and put fewer dollars toward coverage that wouldn’t be used.

While self-funding is an excellent way for employers to help their bottom line, it also gives employers more autonomy to select healthcare benefits and partners who provide more value.

Considering self-funding?

Learn more about how RMTS can help employers save more and risk less.