5 Common Misconceptions About Self-Funded Health Insurance
As an employer, how much of your increased healthcare benefit renewal is providing additional value to you, or your employees? Our guess is not much. While the costs of premiums and deductibles for conventional group insurance have reached astronomical heights, there’s little to no return on investment for the increased employer and employee spend. The good news? An unbundled self-funded health plan offers a way to control costs without sacrificing coverage. While most larger companies have already taken advantage of self-funded insurance, smaller employers tend to shy away from it due to several misconceptions. Read on as we debunk common self-funding myths that are holding you back from powerful savings for your business—and affordable care for your workforce.
1. Self-funding is too risky—high claims could put my business under
Employers currently cover 82% of healthcare costs and face relentless yearly premium increases without added value or insight into their claims data. Self-funded companies pay actual healthcare claims. Any risk you assume as a self-funded employer is covered through stop-loss insurance. Stop-loss insurance protects employers against potential catastrophic claims or aggregate claims that may exceed employers' expectations. And if employers don’t reach their expected amount in actual claims, they get that money back. In fully insured plans, even if employers don’t reach their expected amount in claims—the insurance carrier keeps the unused dollars. In that way, one could argue that fully insured plans are riskier.
By self-funding, with the help of Sola, employers unlock long-term visibility into their claims data. This means that over time, they’ll gain direct insight into where risks or high claims are likely to occur. Employers can more accurately forecast claim spend, lower costs and tailor their benefits plan further—so it’s as cost-effective and accessible as possible. If an unusually high claim does come in, stop-loss acts as an extra layer of protection. Aside from stop-loss, our team of experts work diligently on claims mitigation, auditing and healthcare navigation—guiding your employees toward high-quality, cost-effective care—so you can avoid high-cost claims from the start.
2. Self-funding causes too much disruption
After payroll, healthcare is the second largest expense for most employers—and something that employees value most. A low-cost, high-quality benefits package is also a sign that an organization cares about the people who make it successful. Right now, a third of Americans forgo medicine as prescribed because it’s too expensive—and 46% of insured adults struggle to afford out-of-pocket costs. While disruption may occur with change, I think we’d all agree that a fresh perspective would be welcome.
Sola works alongside your broker to help you make a change for the better. We're the right partner to make self-funding as seamless as possible and bring powerful savings within reach. It’s time to break away from the status-quo mindset—we’ll help you tackle any disruption that may occur, alleviating any confusion throughout the transition and beyond.
While employee impact varies based on plan and network changes, once your employees get used to their new plans—which include lower-cost or $0-dollar deductibles, copays and generic drugs—you’ll be glad you made the switch.
3. My team will lose access to their doctors
Sola’s solutions don’t rely solely on provider networks, so employees can continue to see any provider they choose. But if employees follow the guidance of our independent navigators, they’ll gain access to potentially free healthcare. That equates to an immediate pay raise. In fact, it’s even helped some of our employer clients with employee retention.
4. Only large employer groups have access to self-funded health plans
When self-funding started gaining traction, large employer groups were the first to get on board. However, in recent years—as premiums continue to skyrocket unchecked—the model is gaining traction among companies of all sizes, allowing smaller employers to reap powerful savings and offer competitive benefits packages like their larger counterparts.
By choosing self-funding, smaller groups can avoid relentless premium increases and take more control of their plan costs and claims data. If you’re a smaller employee, who has tried to go self-funded, but faced underwriting obstacles, Sola can help. We work with a wide variety of underwriters and will do everything in our power to get you on the path to self-funded.
5. Low-cost benefits = Low-quality coverage
This is a total myth. At Sola, we have access to independent healthcare navigators who will work with your employees—when they need to seek care—to steer them toward affordable options at providers with top-quality rankings.
As the cumulative effect of current inflationary stresses is expected to raise healthcare renewal rates even further in the next few years—self-funding should be top of mind for employers. With self-funding, you’re in the driver’s seat. Take control of your costs and your claims data—and create a benefits strategy that adds value to your business, and your people. Every employer group should have the opportunity to evaluate benefit alternatives—especially alternatives that could yield powerful savings.
To learn more about self-funded health insurance, check out our Employer Guide to Self-Funding