WHITEPAPERS & ARTICLES
A Cypress Series:
The Top 3 Advantages of Self-Funded Plans
Advantage #1 – Plan Flexibility
Out with the One-Size-Fits-All
A one-size-fits-all health plan doesn’t work for anyone. It never has. That’s because every work population is totally unique and is made up of employees who have different wants and needs related to benefits coverage.
Unlike traditional, fully insured plans, self-funding allows for an incredible amount of flexibility. With this structure, employers are able to work with a TPA to custom-design their benefits. They can choose to incorporate the services and solutions that best fit their workforce and forego any that won’t result in added value. Plus, if coverage needs change over time, plans can easily be adapted. And if data shows a certain risk factor developing among a portion of the population? Self-funded plans make it easy to incorporate specialty programs to act on this data.
Comparing Plan Structures
By taking a side-by-side look at traditional, fully insured and self-funded plans, some of the fundamental differences become much clearer.
The basics of a traditional, fully insured plan look something like this:
- Employer partners with insurance carrier
- Carrier offers standard plan
- Carrier determines set monthly rate
- Employer pays same rate on a month-to-month basis no matter how much is actually accrued in health claim costs
- Any profits and/or savings realized stay with the carrier
A self-funded plan has a much different make-up:
- Employer partners with a TPA
- TPA works with employer to evaluate benefit needs by workplace
- A set monthly rate is eliminated
- Employer pays actual claim costs each month instead of a pre-determined rate
- Any profits and/or savings realized go back to the plan/employer
The two approaches to employee benefits are almost completely opposite. While a traditional plan pretty much falls within the one-size-fits-all category, a self-funded plan can be fully customized by the company.
What Does Your Workforce Need?
The main goal of a full-service TPA is to match clients with a plan that makes the most sense for their individual business and the workforce they employ. Health benefit needs vary significantly among companies and industries, and it is most effective to consider them on a case-by-case basis.
Along with taking the size and scope of each team into account, self-funding allows businesses the flexibility to:
- Add/update health benefit services as needed – Many factors influence the type of benefits a business needs, ranging from the most prevalent health conditions plan participants experience to the type of industries served. While something like a dialysis management program may be crucial to one company and its work population, it may not be a necessity for another. This is
something that makes self-funding so attractive. The plan is custom-built by the employer and TPA working together so that the most appropriate benefits can be offered. Plus, as needs evolve, the benefits offered in a self-funded plan can, too.
- Offer services from specialty partners – Since self-funded plans are far from traditional, they incorporate the latest thinking in health care and the partners who embrace it. Consider accessibility to providers and procedures for example. In today’s on-the-go society, it can be hard for a busy family to get in to see their doctor for a same-day appointment. That’s where relationships with specialty partners come in. Together, TPAs and specialty partners offer concepts like telemedicine that allow plan participants to receive quality care through digital-based alternatives like phone, email and video chat.
Access Benefits Data & Act on It
In a traditional insurance plan, employers often receive some cumulative data at the end of the year. While the numbers give an overview of what’s happened over the last 12 months, they aren’t as helpful after the fact. With a self-funded plan administered by a TPA, you can:
- Track and report on benefits data regularly – Data is a big deal with self-funding. What if there was a pattern you could act on based on the numbers you were seeing in a month’s or quarter’s span? A certain health risk that could be addressed through a specialty program? Prescription costs that were starting to skyrocket? Our take on data: be proactive and stay ahead of the curve.
- Utilize predictive plan modeling – Wouldn’t it be nice if employers could plan for future health plan expenses? Predictive modeling makes this possible. With it, employers can use past and current claims data to analyze risks and forecast costs to come. They can follow claims trends and identify any areas of high risk. These findings can help crack down on any gaps in care and waste in health spending, too.
Soak Up the Flexibility
Employers shouldn’t have to settle for health plans that offer little (or no!) flexibility. With self-funding, they can finally take control of their employee benefits.
A self-funded plan provides the ability to adapt benefits by work population and incorporate the services and solutions that are most important to the team. It also offers employers the option to add specialty programs as needed and have access to the plan data that helps identify health risks and respond to them.
For more information on other top advantages of self-funding, read our full whitepaper on The Top 3 Advantages of Self-Funded Plans.