<img alt="" src="https://secure.imaginativeenterprising-intelligent.com/794699.png" style="display:none;">

The reasons self-funding your health insurance plan will lower your costs

Whether you are fully-insured, level-funded or self-funded your employees will go to the doctor, go to the hospital, or get prescribed medications. A change in how you finance your health insurance plan won't change the fact that your employees need healthcare.

So, why do so many employers consider self-funding their health insurance plan?

Because for the employers that are a good fit for self-funding, it will lower their cost over time.

Watch the video above to learn how.

The biggest pro, and I would say the main reason employers actually are considering self-funding is over time it is gonna lower your costs. Now it doesn't mean it's gonna do it in year one. To be clear, self-funding is a three to five year decision. And there's a lot of things to consider here. But at the end of the day, there are a few reasons why self-funding your health plan, if you are a good candidate, will eventually lower your costs. For one, there's no more state mandated benefits. And a lot of times these state mandated benefits are things that are just put in place by individual states. You cannot control as an employer in a self-funded health plan, you have the full flexibility to say, I want to include that or not include that. This could be something as simple as a prenatal screening that a certain state requires. Typically, these state mandated benefits are things that are gonna cost the employer more money, so getting rid of those mandated state benefits is going to save employers money in the long run. There are other things that are built into fully insured health plans as well, that as soon as you go self-funded are eliminated. Things like premium tax that are built into a fully insured premium that an employer really has no control over. Or when ACA was passed for a long time until it was repealed, there was something called a health insurer fee built into every fully insured premium. And so as you move into a self-funded environment, those things go away and that is immediate savings. In addition to that, there are gonna be years in a self-funded health plan where you have really good years where claims perform much better than expected, and you are gonna get great positive cash flow in those types of years, and you will have some. Now, granted I said it's a three to five year strategy, so that may not happen year one, but in those years where your claims perform well, that positive cash flow is gonna impact your bottom line.

About the Author

Mike Kroupa, Self-Funding Insurance Expert

I grew up in a house that was constantly under construction and the experience helped me uncover one of my passions, remodeling. After running a successful remodeling business with my brother during college, I decided I wanted to keep this as a hobby. Instead, I took my advisor’s recommendation and started down the actuarial path, which ultimately led me to insurance.
Since then, I have focused my career teaching employers how to better manage their health insurance plans. I found myself frustrated year after year of doing the same thing because it didn’t feel like I was making an impact. Healthcare costs were continuing to increase, and it felt like the only options employers were left with was increasing deductibles, increasing contributions, and switching carriers.

There was a turning point for me in 2020 as I found Health Rosetta, an ecosystem for scaling adoption of practical fixes to our health care system. As my clients started adopting these fixes, I found myself getting passionate about what I was doing for the first time. Then I realized my hobby of remodeling was driving the passion because I was remodeling health plans. Even better, I was having an impact because patients (employees, spouses and children) were getting the best care they ever have and saving a lot of money in the process.

Get in contact with Mike: 

Phone: 630.738.1835     Email: mkroupa@gocgo.com     LinkedIn: Mike Kroupa

Mike Square