When speaking with small and medium sized businesses, the most common misconceptions that I have uncovered from a small employer about self funding their employer health insurance include:
"Self-funding is ____________"
· only for large employers.
· too risky.
· too complicated.
· only for healthy employees.
· requires a large cash reserve.
While there is some risk involved in self-funding, it can also provide greater flexibility and cost savings compared to fully-insured plans. Some additional administrative work is required, but many groups find that it is worth it for the cost savings and flexibility it provides. Stop-loss insurance, which is purchased when self-funding, protects employers from catastrophic claims, making self-funding a viable option for companies with a mix of healthy and sick employees. While having a cash reserve is important, the stop-loss insurance protects employers from unexpected or catastrophic claims, allowing them to better manage their cash flow.
Health Insurance is more than likely your second largest fixed cost. Let us help you make it a predictable expense, versus a year-over-year roll of the dice. We will be glad to show you different ways of funding your health insurance, while protecting your most valuable asset, your employees.
If you are a group over 25 employees and your agent or consultant has not spoken with you on the benefits of self-funding your health insurance, please reach out to us here at Associated Financial Consultants or drop me a line direct right HERE.