Self-Insured Health Plans - Customizable Medical Coverage You Control
Edward Neeman | Published: June 14, 2018
With the current healthcare climate in the United States, it isn’t unheard of for individuals to seek alternative means of acquiring health insurance. One of the most popular alternatives being self-insured health plans. Of course, what may benefit one person may not work for someone else. So, the following information details everything you need to know about self-health insurance plans to learn if this is the right path for you.
What Are Self-Insured Health Plans?
When it comes to this type of health plan, it occurs in the workplace. Also known as self-funded health insurance, in a self-insured health plan, an employer is responsible for the financial risk when it comes to health benefits coverage for employees. If you opted for a self-insured health plan, rather than paying for fixed premiums, out-of-pocket claims are paid for when they incur.
Self-health insurance plans are typically found in larger employment, though small businesses are known to use it as well. It is because there is a financial risk, so an employer must have the financial resources to cover this.
A health insurance plan that can be found somewhere between fully insured and self-funded health insurance is level funding. Level funded health plans deal with you still being self-insured, and employers pay a steady (leveled) fee on a monthly basis.
In level funded health plans, the monthly fee is determined by a TPA (Third-Party Administrator). When it’s all said and done, level funded health plans are known as hybrids because they grant predictability like fully insured health plans give, while also having the comfort of only paying for incurred claims like a self-insured health plan.
Who Regulates Self-Insurance Plans?
One of the major questions asked about self-health insurance plans is who is actually regulating them? Fully insured health plans fall under regulation by the state. A self-insured health plan does not fall under the same regulation, but those types of plans still must follow certain federal laws.
The main regulation that oversees a self-insured health plan comes from the Department of Labor. Many subsequent laws are followed from there including the Employee Retirement Income Security Act (ERISA), the Americans with Disabilities Act (ADA), the Health Insurance Portability and Accountability Act (HIPAA), the Pregnancy Discrimination Act, and more.
Self-insured employers are also able to protect themselves, if need be, for unpredicted/catastrophic claims. This can be done with the purchase of stop-loss insurance, and it can reimburse employers for claims that have exceeded a specified financial threshold.
Self-Insured vs. Fully-Insured
Before setting up any type of health insurance plans, it is beneficial to weigh all the options between fully insured and self-funded health insurance.
Full insurance plans are seen as more standard and common. With a premium paid to insurance providers, the financial risks fall onto them rather than employers. Any claims are dealt with by medical providers and insurance companies.
At the same time, fully insured plans come with the risk of higher premiums. Though employers can negotiate with insurance providers, this has to be done annually.
On the other hand, self-health insurance plans do not deal with premiums and focus on incurred out-of-pocket costs. They have some clear federal regulations as well to help with protection.
However, since employers are covering incurred costs in a self-insured health plan, sometimes pressure occurs for employees to opt for cheaper medications or to use less care in order to save money for the company. It does open the door through to other methods of coverage such as level funded health plans.
Self Insured Pros and Cons
If you are deciding to go with self-funded health insurance, knowing all the benefits and weaknesses of this type of insurance can help you better understand it and handle any issues that may come up:
Pros Of Self Insured Health Plans
- Customized plans
- Ability to purchase stop-loss coverage to lower risks
- Not subjugated to state-regulated mandates
- Don’t have to pay premium taxes
Cons Of Self Insurance Health Plans
- Large financial risk
- Budgeting can get complicated
- Potential tension by pressuring for less coverage/use to save on costs
Finding Self-Insured Health Plans with First Quote Health
At the end of the day, if you have decided a self-insured health plan is the way to go, then you should find the one that works best for your situation. Here at First Quote Health, we help you connect with affordable plans to fit your needs and budget. With our help, it is easier than ever to find the right self-insured health plan, so get started today.