Q: Before we get into a mid-year switch specifically, why might an employer want to consider self-funding in general?
It saves money.
- You only pay for the healthcare your employees use in a given year. An expensive year doesn’t drive up your premiums in the future.
- You get to decide how much financial risk you want to take on.
- There are automatic tax advantages.
Cost control tools put you in the driver’s seat of your plan.
You have more decision-making power over your own plan.
You have more transparency into your healthcare spend, which provides opportunities to improve the plan and save money.
Q: What are some risks and benefits of switching to self-funding in the middle of the plan year.
- Self-funding can be challenging for members who haven’t been engaged in their healthcare before.
- You have to deal with new ID cards and possibly another Open Enrollment.
- You may have to deal with doctor’s offices that are unfamiliar with self-funding, particularly if you move to an RBP plan.
- If you’re on a level-funded plan, that’s not the same as self-funding, and there may be runout claims you need to address.
- Eliminate conflicts on interest in your health plan.
- Cost-saving features such as telemedicine favor your bottom line, not your insurance carrier’s.
- You can add features like care navigation and advocacy and drive down costs.
- Your renewal date might change.
- You might discover you need a different benefits advisor.
- You’ll have a new network, or potentially no network, which means disruption. However, the current business and economic situation may make members more open to change.
Q: If a group does decide to make the mid-year switch, can you give some practical advice for how they should go about it?
- Make sure your benefits advisor is up to the challenge
- Make sure you get claims data from your current plan before getting out of the contract. Getting out of the contract itself is actually pretty easy
- Be patient, and allow enough time to make the transition smoothly. Make sure telemedicine and Rx and ready to go by Day 1 of the new plan.
- Use the transition time for employee education. Don’t just teach them how to use the plan, also teach them how to respond when it doesn’t seem to work seamlessly.
- Expect some difficulty, and be upfront and honest about that with all the parties involved. Switching to self-funding involves some extra effort, but for many employers it’s worth it.