Employer Health Care Benefits: There is a Better Way

Most employers probably don’t regard charging employees more every year for health insurance as a competitive disadvantage because they believe—or have been misinformed by their broker-consultant—that everyone else is in the same situation. The truth is, there is a better way, and a growing number of employers are moving in that direction.

 

Self-Funding

The first step is for employers to move away from traditionally fully-insured medical plans and self-fund their health coverage. With self-funding, employers pay an administrative fee to have an insurer or TPA administer their health plan—deal with providers, claims, etc.—and a premium for stop-loss insurance to protect against really large claims costs.

The big difference is with self-funding employers pay their own claims. This means they get to see every claim and know exactly where every dollar is going. And they no longer pay the hefty margin above claims costs that carriers bake into their fully insured premium. Over a multi-year period, the savings are significant.

The icing on the cake is that self-funded plans are not subject to as many federal and state taxes, including the 2.7% Affordable Care Act Health Insurance Tax.

 

Group Medical Captive

While self-funding is an important first step, self-funding in a group medical captive with a sophisticated disease management program like Everlong Group Medical Captive Services takes cost saving to the next level.

Employers in Everlong get an extra level of protection against volatility and premium increases. Risk is pooled amongst captive members, thereby dampening volatility during high claim years and giving members the ability to have some of their stop-loss premium returned in good claims years. And Captive members enjoy the advantages of group purchasing power when buying stop-loss insurance.

The final advantage of self-funding in the Everlong Captive is its sophisticated programs to reduce health care claims costs. Since employers who self-fund their health plans pay their own claims, they reap all of the savings from reducing those costs. Everlong offers best-in-class claims cost-containment initiatives such as predictive modeling and health analytics tools, sophisticated disease management programs, and completely transparent pharmacy cost control resources.

Part 3: Game-changer’: How One Employer Got Off the Hamster Wheel

Catch up on Part 1: From Hamster Wheel to Game-changer

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