Self-funded insurance could help in many ways
Benefits of Self-Funded Insurance
At first glance, Self-funded insurance plans can seem expensive and risky. But, with the right plan for an employer, and other components such as stop-loss insurance, self-funding can provide lower costs and greater flexibility to the employer. Some benefits of self-funded insurance include:
- Healthcare Reform Loopholes - Self-funded insurance plans are exempt from many ACA requirements.
- Lower Costs - By directly financing claims, an employer evades paying claim reserves, Carrier administrative profit margin, risk charges and premium taxes which are all costs that go into a monthly premium.
- Stronger Flexibility - Self-funded health plans are exempt from state insurance laws that usually mandate certain benefits for other plans. They also allow employers to build a health plan to target specific employee needs and company goals.
- Cost Management - Flexibility and analysis allows employers to make plan changes necessary to manage costs. A Third Party Administrator (TPA) can supply employers with the tools an data needed to make necessary decisions to design a plan that allows easier management of costs.
Types of Coverage
The amount of risk for self-funding can be limited through the use of stop-loss insurance. A stop-loss insurance policy is one of the most important components of a self-funded plan. It's important to understand the different types of coverage available to employers.
There are two types of stop-loss coverage:
- Individual (Specific) - Specific coverage protects against catastrophic claims acquired by a specific individual.
- Group (Aggregate) - Aggregate coverage protects against all together collected claim activity for the plan that is expected to exceed a maximum limit.
Self-Funded & Stop Loss Compliance with the ACA
Since the ACA (Affordable Care Act) passed, carriers, employers, regulators and consumers have all been trying to understand the changes in the insurance landscape. State insurance regulators are responsible for the regulation of insurance, including stop-loss insurance. Although the ACA has imposed requirements on self-funded insurance plans, numerous other provisions, including rating restrictions, essential health benefit requirements and state mandated benefit laws do not apply. Generally, stop-loss insurance is not required to conform to state or federal health insurance laws, including the ACA.
Contact our expert team and we can help ensure ACA compliance for your clients.