UBP blog

07/15/2009

Want to cut healthcare costs 5 to 50 percent now and keep saving for the future? See if partial self-funding works for you.

On July 1, 2009, a new plan design—the partially self-funded plan—became available in Massachusetts by two new carriers. It’s an alternative to traditional health insurance that can cut group healthcare costs 5-50% and allows you to establish and fund your own health benefit plan.

Since 2002, small-to-mid size employers in other states have drastically cut their health insurance costs and preserved savings into the future with these plans. Here’s how they work.

Pay for what you use (and nothing more):

Self-funding plans let you pay for the amount of health care your group actually uses and nothing more. What happens is this, the employer assumes financial risk for funding health benefits and makes payments every month to cover employees’ claims, third-party administration fees and an add-on stop-loss insurance policy. This is in direct contrast to the fixed premium amounts they’d pay to the carriers in a typical fully-funded insurance plan.

With traditional health insurance plans, whenever your company incurs less than your expected annual claims amount, they carriers are the ones that benefit financially because they keep your unused claims dollars as profits. With self-funded and partial-self funded plans, you get the excess claim dollars back at the end of the plan year as a refund. Now physical well-being equals fiscal well-being for your employees.

Premier health protection is for more than just the “big guys” now:

Claims will still happen and in fact, one of the biggest concerns small and medium sized organizations have when considering partially self-funded plans is fear of large claims losses.

With partially self-funded plans this fear can be alleviated. That’s because partially self-insured actually means that you don’t pay all of your company’s claims, just the smaller ones up to a pre-set dollar amount. For your company’s unexpected and costly claims, you partner with an insurer and stop-loss insurance kicks in.

Partially self-funded plans feature two unique stop loss benefits. Specific stop-loss benefits protect individual employees from the crippling costs of unexpected, catastrophic claim expenses. Aggregate stop-loss benefits protect small business owners from the total costs of many smaller claims if that total is higher than their pre-set dollar amount.

With specific and aggregate stop-loss insurance, small and medium sized organizations now can have Fortune 500 level protection from unexpected high claims costs.

Two carriers in Massachusetts have begun to sell partially self-funding plans effective 7/1 and all plans meet the state’s minimum credible coverage (MCC) requirements.

We’d love the opportunity to discuss these plans with your company and see what we can save you. So give us a call at 617-859-1777 and we’ll work together to set a date and time.

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