Is your company’s health insurance costs steadily rising at an egregious rate that really has you concerned about your ability to continue offering health care benefits to your employees? If you have a large enough employee pool (100+ employees), you may wish to consider self-funded health care benefits. I recently read an article on Inc.com that discusses one company’s self-funding of health care benefits as a means to significantly reduce its annual health insurance costs. The company’s actual yearly savings? 15-20% since the switch. Click on the title, Case Study: Paying Employee Health Claims Out-of-Pocket, to read the entire article.
Another companion article by the same author weighs the pros and cons regarding self-funding of health care benefits. That article, Should You Self-Fund Your Employee Health Benefits, provides a good overview on the subject. If you have a relatively in-shape and/or young group of employees, self-funded health care may be a viable option for you to pursue. Or if you offer health and fitness programs that encourage and motivate employees to get into and remain in optimal health, this option may be a great fit. As the article states, if you have employees in really poor health, the risk of a catastrophic illness is likely too high to consider self-funding of health care benefits. Of course, there’s always the risk of a debilitating accident, no matter what the average health of your employees is. There are ways to mitigate this risk. You could provide catastrophic insurance coverage for your employees through a health insurance provider and provide self-funded health care for everything else.
Whatever your initial thoughts on the subject – even if your company is currently too small (and thus the risk too large) to even consider self-funded health care, I think it’s worth your while to read both articles. It’s always good to know what options exist.