Battle Health Care Cost Increases With Alternate Funding
This isn’t the 1st time you have seen this from the Omega Benefit Group team. We have been using the term “alternative funding” for several years now and the look of surprise on prospects faces still shocks us!
Year after year, employers find themselves battling large increases on their health insurance plans with little to no warning. Unfortunately, this creates an extremely challenging environment, forcing the employer to make tough decisions that affect not only their bottom line, but the quality of benefits they offer. Employers either end up absorbing the increases, passing the buck off on employees, making benefit changes, or a combination of the three.
The most difficult part of this annual cost crisis is that the employer must make benefits decisions with little to no data in regards to where the increases may be coming from. In a world where benefits can be one of the highest expenditures for an employer, the renewal process can be crippling. Fortunately, there is an option to help employers break the vicious cycle.
Alternate funding plans, also known as level -funded plans, provide an answer to the conundrum. These plans ease the difficult process by giving employers resources traditionally reserved for large accounts only. The features of the plans allow employers in the segment to take a long term approach and use multiple year strategies.
The elements of level-funded plans mimic traditional fully insured plans, so there are no surprises; however, they are filed as self-insured plans. While the words self –insured strike fear into the hearts of some employers, the plans are created specifically for groups who are not necessarily candidates for a true self-insured arrangement. The plans are created for employers who want a fully insured model, but crave transparency and flexibility. The ideal candidates may also be fed up with subsidizing health insurance costs for other groups covered by their current health insurance carrier. Other appealing components of the plan include:
- The opportunity to receive money back in the end of the year either in the form of a reimbursement or credit.
- Monthly claims experience to protect employers from being caught off guard.
- Additional plan design flexibility.
- Lower pooling levels to shield them from the impact of large claims.
- Potentially lower premium taxes.
The bottom line is that an alternate funding plan includes the best of both worlds. In an ever-changing and uncertain healthcare cost climate, these plans can provide the stability employers crave with their benefits packages.