Expert: Jacky Bosse
Company: Byrne Insurance
Phone: (502) 426-4200
Website: http://www.byrneinsurancegroup.com/
Published December 20th, 2024
For businesses, group health insurance is a powerful tool to attract and retain talent while supporting employees’ health and productivity. However, with the rising costs of healthcare, choosing the right funding strategy is crucial for balancing employee benefits and organizational budgets. Here are various ways an employer can fund group health insurance.
Fully-Insured Health Plans – Fully insured plans are the traditional model for group health insurance. Under this arrangement, an employer pays a fixed premium each month. The insurance company then assumes the financial risk and pays for medical claims.
There are pros and cons to his approach. It is predictable and there is less administrative work involved. But employes have little control over plan design and premiums could be higher. Check with your insurance company to see what works best for you.
Self-Insured Plans – In a self insured (self-funded) plan, the employer assumes the financial risk for employees’ health care costs rather than paying a fixed premium. Typically, the company will pay out of pocket as employees’ claims arise. This program offers cost savings, a flexible plan design and employers only pay for claims as they arise, freeing up cash flow.
However, a year with high claims can strain cash flow and it does require staff power to manage.
Another approach to consider is creating a Captive. A Captive health insurance plan involves creating a separate insurance company owned by the employer(s) to provide coverage. This strategy allows businesses to pool their risks and potentially reduce insurance costs.
Captive health insurance involves creating a separate insurance company owned by the employer(s) to provide coverage for their employees. This strategy allows businesses to pool risks and potentially reduce insurance costs. This approach involves more control, costs savings and transparency. But it can also require more oversight, staff time and exposure to risk.
There are many other plans available. Talk to your agent and ask questions. Consider your employee pool and what is best for your people, and for your ability to manage as an organization. Insurance planning can be difficult and overwhelming but find out your options and go from there.
