Tom's Take Blog

June 22, 2018

How do self-funded health plans help simplify benefits administration for companies with multi-state operations?

Tom’s Take: There are so many companies out there (Cypress included!) that have headquarters in one state and additional offices spread across the country. Having operations in various zip codes like this can get tricky when it comes to offering employees a uniform health plan. With thousands of federal and state mandates in place, following multi-state requirements is no easy task.

 

This isn’t such a challenge with self-funded health plans, though, as these plans are generally only subject to federal law. (Self-funded plans through public employers can be an exception.) That’s because ERISA is the main governing body in self-funding and it pre-empts state laws.

 

How is this so beneficial to self-funded employers operating in more than one state? Here’s a quick look:

  • Simpler process for offering the same employee benefit plan instead of creating different ones that must adhere to varying laws from state to state
  • More flexibility in building a health plan that includes the most relevant employee benefit options for your work population
  • More selection in vendor partners vs. a limited number of carriers who offer national plans
  • Ability to avoid the extra costs that can add up with multiple plans/coverage by state
  • Ease in administering one health plan with the same employee benefit structure in all states where a company operates
  • Elimination of taxes on most health care premiums as well as those paid to insurers in traditional, fully funded plans

 

Every state has its own set of mandates that health plans must follow, and this whole process can get complicated and confusing when these requirements conflict with each other and/or overlap with federal ones. Self-funding’s regulation by federal law simplifies this process by allowing you to offer a single, uniform health plan to your employees across the United States without the hassle of managing multi-state requirements.

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