We’ve broken down the difference between self-funded health plans and fully insured plans, and now we’re ready to address some common myths surrounding self-funded plans. We’re calling it Myth Busters: Self-Funded Health Plans Edition.
Here are 3 common myths about self-funded health plans:
1. MYTH: Self-funded plans are never a good fit for small companies.
Let us guess –– when discussing self-funded plans, you’ve probably heard once or twice that self-funded health plans aren’t a good fit for smaller businesses. But that’s not necessarily the case. While self-funded plans may not be the missing piece to your puzzle, some insurance companies do offer self-insured health plans for companies down to two employees. The majority of U.S. businesses have fewer than five people, making the majority of U.S. businesses, well, small businesses. Many don’t view these plans as a good fit for employees due to the potential risks associated, but, there are many frameworks to nip unnecessary risks in the bud. This leads us to our next myth…
2. MYTH: Self-funded health plans put employees and employers at risk.
Let’s put this myth to rest. First and foremost – where are those risks stemming from? Is the risk really in the funding? Or is it in the lack of planning and preparation from business owners? Self-funded plans give you more flexibility and leeway to craft a plan that suits your business and protects you from unexpected financial liability.
Yes, there may be a reputation of risk associated with self-funded health plans, but many solutions are available to protect companies from those financial risks. When companies plan for the “what-ifs” instead of shying away from self-funded plans entirely, they find that with the simple integration of Stop Loss insurance, the risk isn’t as risky as first believed. Stop Loss insurance plans go into effect when catastrophic health events or other unpredictable expenses occur. This protects businesses from paying the amount in full.
3. MYTH: Self-funded health plans are hard to understand.
Sure, self-funded health plans come with more decisions to make and elements to understand. But that’s the price of having a flexible, tailored plan. Those elements, like specific and aggregate deductibles, help maintain costs and should be given the time of day to understand its benefits fully. So instead of going down the path of self-funded health plans alone, consider partnering with a knowledgeable and trusted Third Party Administrator (TPA) to advise what is best for your business.
The reality is –– when it comes to complexities, self-funded health plans are not that different from fully insured plans. The cost of partnering with a TPA is frequently less than the operating cost of fully insured plans through large-scale insurance companies.
Don’t let these myths stand in the way of choosing the insurance plan that’s right for your company and your employees. If you’re in search of a TPA to walk by your side through the world of benefits, connect with us today.
