What is Self-Funding?
Self-funding is an effective way for employers to cut unnecessary costs, navigate plan regulations and improve health plan design and customization for overall better health plan experiences.
Instead of paying a flat rate to insurance companies under a fully insured health plan, with a self-funded health plan, employers pay healthcare claims as they emerge. While this alternative method means employers take on the risk previously assumed by insurance carriers, the savings potential can significantly outweigh the risks, especially when combined with the right risk management solutions.
Why Switch to Self-Funding?
Self-funding has long been popular among larger companies due to its ability to help employers increase cash flow while accessing custom health plans. For employers with fewer resources, the same was not always the case.
Now, by integrating the proper stop-loss protection, risk management, and other cost-containment solutions in place, self-funding is equally attractive to small and mid-market groups. Crumdale Partners makes it easy with its comprehensive self-funding platform, Franklin Health. Franklin Health integrates all the solutions needed to cut costs and reduce risks in one place.
What Are the Primary Benefits of Self-Funding?
While there are many attractive short and long-term benefits for small and mid-size companies to transition to self-funding, here are some of the primary features that self-funding health plans provide.
Reducing Unnecessary Costs
By funding the health plans for employees, employers avoid the one-size-fits-all payment to the insurance carrier. Insurance plans rarely illustrate what premium dollars are used for. A self-funded plan means transparency; an employer will see where their dollars are being spent.
Crumdale Partners’ Franklin Health platform gives employers transparent contracts and clear cost discussions with consultants who explain where every dollar goes to ensure that the employer’s dollars are spent properly on their employees’ health care.
One of the significant benefits of a self-funded health plan is saving money when claims emerge better than expected. With a fully insured plan, if claims emerge better than the insurance carrier expected, the employer receives nothing in return. In fact, in many cases, that employer receives an increase to their premiums at renewal. Under the Franklin Health platform, when claims emerge better than expected, employers never spend the additional money. Those funds remain in their pocket!
Prescription Drug Rebate Retention
Another benefit of the Franklin Health platform comes from the prescription drug side of the health plan. Drug manufacturers provide payments, called rebates, to Pharmacy Benefit Managers (PBMs) for placing their drugs on a PBM’s formulary list. With insured plans, the rebates are retained by the insurance carrier. With Franklin Health, 100% of these rebates are paid to the employer. For some employers, rebates can equate to as much as 30% of the annual prescription drug cost – a huge savings for employers.
Risk Protection with Stop-Loss
Individual stop-loss insurance protects against catastrophic claims from any one individual. Stop-loss limits the amounts an employer will pay for those claims.
In addition, aggregate stop-loss insurance will provide an upper limit for total costs of the health plan. So, when claims are emerging worse than expected, aggregate stop-loss sets a limit for what the employer will pay.
With our Franklin Health platform, stop-loss protection is built into the program. Learn more about how Crumdale Partners calculates the appropriate stop-loss rates for individual groups to protect groups from high-cost claims.
Less Worry About Compliance
Self-funding also means staying in compliance with ERISA, HIPAA, ACA, etc.- an alphabet soup of federal laws. With Franklin Health, we take care of the compliance concerns for employers. With in-house ERISA attorneys and expert compliance consultants, tools, and resources, we keep employers in full compliance with all benefit laws to help them avoid high fees and penalties.
Plan Design Flexibility & Stability
As hinted to above, State insurance laws do not regulate self-funded health plans, so self-funded plans can create custom benefit designs to get the benefits they need without paying a flat premium rate for a fixed bundle of services that may not be helpful to employees.
Employers can get tailored health plans from Franklin Health, with our expert consultants working with our broker partners to determine the best plan of benefits unique to a specific client.
Ongoing Support & Cost Containment
Through our data analytics programs, the consulting team at Crumdale Partners provides trusted resources, analysis and guidance around benefit changes and design so groups can achieve long-term savings while providing a health plan employees love.
More Money in Employers’ Pockets
Self-funding creates a better way for employers to provide their employees with the healthcare services they want without wasting money paying inflated premiums to insurance carriers.
With Crumdale’s proprietary Franklin Health platform, employers can access high-performing health plans with great flexibility, control, and stability that are tailored to the group’s specific needs. Contact us today to get a complimentary portfolio audit, and let us help you navigate the switch to self-funding with our Franklin Health Platform.