In recent years, it’s become increasingly common for businesss with as few as 200 staff members to explore self-insurance. But beware of hidden traps.
If your organization is weighing self-insurance – or has already taken it – here are three pitfalls that can create unexpected costs.
1. Unfavorable worker mix
It’s impossible to completely eliminate the risk of unexpected, high-dollar health claims. But here’s a guideline to reduce your risk. Health claim stats suggest the “ideal” employee population for a self-insured plan is predominately young, non-tobacco use and male.
Be aware that stop-loss insurance carriers often “laser” those staff members considered higher risk. Lasering means that your company would have to pay out much more in claims for these staff members before the stop-loss coverage kicks in.
2. Loss of network discounts
Some firms learned after the fact that going the self-insurance route caused them to lose providers’ network discounts they previously received under fully insured plans. When reviewing plan vendors’ administration-only choices, ask –
• Will the provider’s network alliances work in your best interests, cost-wise?
• Will the provider only oversee claim payments or negotiate to build the best provider network, quality-wise, for your staff members.
Bottom line – You should get the same kinds of plan designs, networks and discounts as a fully insured plan.
3. Wasteful reinsurance contracts
If the language of your reinsurance contract doesn’t match your health plan’s summary plan description, you may be paying for coverage you don’t need and can never use.
It’s also key to be sure your firm has enough money in reserve to cover run-out claims and other costs that may occur before reinsurance will cover payments. Best practice – annual audits of your financial reserves.
Corporate Wellness Companies