Top 3 Reasons Self-Funding and Stop Loss Can Manage Your Costs

Top 3 Reasons Self-Funding and Stop Loss Can Manage Your Costs

While politicians argue and pundits pontificate, the cost of healthcare continues to rise. Despite some hopeful signs of stabilization in the health insurance market, no one expects the cost of insuring employees to go down any time soon.

Faced with these realities, employers face some tough choices. Should they hold price increases to a minimum by offering less generous plans? Should they drop health insurance altogether? Should they continue to offer solid plans and eat the excess costs?

None of these choices are good ones, but there may be another way. By combining self-funding with stop loss strategies, even small employers can reduce their healthcare costs without skimping on fringe benefits or alienating their employees. Here are the top three reasons the combination of self-funding and stop loss makes sense given the current health insurance landscape.

Cost Savings
Large employers have been using self-funding for decades, drawn to the lower costs and simplified administration procedures. Self-insured companies take on the responsibility for employee health care costs, increasing their risk but significantly lowering their ongoing costs.

This reduction in costs is one of the most compelling reasons to consider a self-insured healthcare program, but combining it with a stop loss strategy makes it even more attractive. With a stop loss strategy in place, the level of risk is greatly reduced, so employers can reap the rewards of self-insurance while avoiding the downside.

Increased Control
An often overlooked benefit of self-insured plans is the level of control they provide. Employers who are self-insured can see exactly where their healthcare dollars are being spent, and that provides opportunities to reduce those expenses going forward.

If the employer sees that a significant portion of their healthcare expenditures go toward treating chronic illnesses, they could put programs in place to prevent those diseases and help their workers live a healthier lifestyle. This strategy may not have an immediate benefit, but it can pay big dividends down the line. Self-funding can increase this benefit, giving employers of all sizes a greater level of control and transparency.

Greater Flexibility.
It has never been more important for employers to be nimble – the world is changing rapidly, and businesses that cannot adapt quickly are at a competitive disadvantage.

Employers who choose to self-insure and self-fund their health insurance plans can be far more flexible than their peers. This flexibility is one of the biggest benefits of these types of plans, and the value is only expected to increase in coming years.

The Value of Level Funding
The three benefits listed above are compelling enough, but self-insuring healthcare costs is even more attractive when combined with self-funding options. By self-funding their costs, employers are able to reduce risk, enhance their benefits packages and more easily predict and control their costs.

Level funding is the key to all of these benefits. With level funding, employers pay a fixed fee every month. If healthcare costs are less than the amount of self-funding, the employer receives a refund. This strategy combines the cost saving benefits of being fully self-insured with the risk reduction of being insured by an outside party. In essence, the combination of self-funding and stop loss provides eligible employers with the best of both worlds.

Feeding Tampa Bay

Feeding Tampa Bay

Joe Stagliano and his CEO Council Of Tampa Bay members were proud to be a part of this Feeding Tampa Bay group volunteer event!

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Crisis Center Of Tampa Bay

Crisis Center Of Tampa Bay

Superior Benefits is proud to be a sponsor to this amazing organization! The CRISIS CENTER OT TAMPA BAY is available 24 hours a day, 365 days a year as the community’s gateway to help.

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