In this article for MedCity News by Adam Schaefer, we look at the reality employers face when it comes to purchasing fully-funded group insurance (the standard group policy from an insurance carrier).
Read the full original article from MedCity News.
Unlike the individual, employers have a way to break out of this status quo and realize very real cost savings for their company as well as for their employees. Companies can do this through what is known as self-insurance (also called self-funding, partial self-funding, or partial self-insurance).
"At the most basic level, insurance is purchased to shift risk. A policyholder doesn’t want to be liable for a negative outcome, so an insurance company takes on that liability and charges a premium. In a self-funded setup, a company decides to take on this risk itself instead of paying an insurance carrier to assume it. For the employees, everything may look and operate exactly the same."
Very large companies have been using this model for decades, but small to midsize companies are now considering self-funding as an option as well. And for good reason - switching to a partially self-funded plan can save a baseline of 12.5% on healthcare spend while reducing or eliminating out-of-pocket costs for employees.
Learn more about these savings in the Nonstop Quick Guide to Partial Self-Insurance:
