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Should Your Company Switch to a Self-Funded Plan?
When it comes to making changes to your plans—like switching from a fully funded benefits plan to a captive or self-funded plan—the Benefits team at PayneWest has decades of experience and are eager to help you find plans that will save you money and potentially boost employees' overall wellness.
One experienced benefits consultant is Becky Byrne, benefit planning sales executive at PayneWest. Byrne has more than 20 years’ experience in self-funded benefits plans; and of all the companies she's helped switch to self-funding, not one of them has changed back to traditional plans.
"I want employers to be attracted to the subject—at least come and talk about it," Byrne says. "It's about improving their work environment, employees’ health and controlling those expenses!"
So, What Are Self-Funded Plans?
Benefits plans that are self-funded are different than what we call "traditional" or "fully-funded benefits plans." In a traditional plan, the employer agrees on an annual premium and pays that amount to an insurance company who then administers the benefits to the employees.
With self-funded plans, employers assume the risk of the insurance costs of its employees. The employer pays the premium directly to the health-care provider itself, and often contracts with a Third-Party Administrator (TPA) to handle tasks like processing and claims.
What Are the Benefits of Self-Funding?
What Are Some Potential Drawbacks?
Self-funding can potentially save you money, but that doesn't come for "free"—there is some effort involved, and it doesn't end right after you switch.
Are You Ready to Change From a Fully-Funded Plan?
"I think the key characteristics of a successful self-funded employer is one who has a minimum of 100 employees, a employer who is not adverse to risk (they're able to assess risk and is able to take additional known risk), and third, they have the cash flow capabilities to administer a self-funded plan," says Byrne. "This doesn't mean it'll cost them more (it could) but more often it doesn't."
Don't know if you're ready to make the switch? You can take a quick, informal assessment to see if you're ready to look into self-funding your benefits plan.
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