In the ever-changing world of employee benefits, one term that's been making waves is "self-funded plans." While it may sound complex, self-funding is gaining popularity among businesses of all sizes, offering a tailored approach to healthcare benefits that can lead to significant cost savings and improved employee satisfaction.
65%
Over the last few years, self-funded plans have constituted approximately 65% of commercially covered employees. This statistic alone speaks volumes about the growing appeal of self-funding, but let's dive deeper into what it actually means and why it matters for businesses like yours.
Availability of “Self Funded”
First, let's debunk the myth that self-funded plans are only for large corporations with deep pockets. In reality, businesses of all sizes can benefit from this model.
Here's how it works:
Instead of paying fixed premiums to an insurance carrier, self-funded employers assume a portion of the financial risk for providing healthcare benefits to their employees. This means they directly fund the cost of claims incurred by their employees, often with the assistance of a third-party administrator (TPA) to manage the day-to-day operations.
You might be wondering, "What's in it for my business?" Well, according to UnitedHealthcare's recent analyst day report, level-funded plans—a type of self-funded arrangement—can yield an average savings of 17% for employer groups. That's significant savings that can be reinvested back into your business or used to enhance other employee benefits.
Tailored Benefits Packages
The benefits of self-funding go beyond just cost savings. Traditional health plans have been scrutinized for their increasing administrative costs, which can eat into your budget without delivering proportionate value. With self-funding, you have more control over your healthcare expenditures and can tailor your benefits package to meet the unique needs of your employees.
Quality Over Quantity
As the landscape of healthcare evolves, health plans need to adapt. Growth at all costs is no longer sustainable, and major carriers are recognizing the need for more efficient and collaborative approaches. This shift is evident in initiatives like Sentara's acquisition of AvMed, aimed at driving innovation and improving patient outcomes.
However, it's essential to tread cautiously when navigating the waters of mergers and acquisitions in the healthcare space. Studies suggest that M&A activity can lead to increased medical costs ranging from 6% to 17%. This underscores the importance of seeking value-based care solutions prioritizing quality over quantity.
Value-based care is gaining traction as a response to rising healthcare costs and inefficiencies in the system. Benefits providers like us are embracing this strategy, focusing on improving patient outcomes while controlling costs through proactive care management and provider collaboration.
The 19:21 Difference
Self-funded plans offer a compelling alternative for businesses looking to optimize their healthcare benefits. At 19:21, our mission is to provide better benefits, a better way. This includes helping our clients take control of their healthcare spending, leveraging innovative solutions, and prioritizing value-based care, to ensure a healthier, more productive workforce and safeguard your bottom line.
Interested in exploring self-funded plans for your business? Schedule a consultation with our team of experts to get started.
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