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Should My Organization Be Fully Insured Or Self Funded?

Most employers offer health care benefits for their employees. When they offer such benefits, they may finance in one of two ways.

Self Funded Benefits

Self-Funded health insurance benefits are provided directly to their employees. The employer basically operates their own health plan as opposed to purchasing a plan from an insurance provider. Although these types of benefits carry a much larger risk, many employers prefer this option as it saves them significant money. Keeping the employees healthy is a benefit as it can potentially avoid catastrophic illness. Larger employer groups of 5,000 employees or more typically choose self-funded plans.

Fully Insured Benefits

  • Fully Insured Benefits involve purchasing health insurance from an insurance company. Traditional full-insured health insurance involves the organization paying a premium to the insurance carrier. These premium rates provide fixed rates during the first one or two years and is typically based on the number of employees enrolled. The covered employee (as well as their dependents) is responsible for any co-payments or deductible amounts required for services covered under the plan. Small businesses with less than 1,000 employees generally prefer the fully-insured option.

  • When developing the health care benefits package for your employees, one of the biggest decisions is choosing between health insurance providers. The PPO (Preferred Provider Organization) and the POS (Point of Service) option will depend on the features desired most in a plan. The PPO model is a system which consists of a group of doctors and hospitals that provide medical services to an exclusive organization or IPA (Independent Physician Association). A PPO can also be sponsored by more than one employer group keeping the costs down and limiting out of pocket costs. Keep in mind, there is less coverage offered by non-PPO providers. Under a POS plan, there is NO deductible, and the employee is required to pay only a minimal copayment when using the provider within the network. With this option, your employees will have the freedom to go outside of the network for treatment without consulting the primary care provider. Keep in mind, this could result in more out of pocket costs for the employee.

  • Having the right health insurance plan will improve employee health, thus providing greater productivity. The most common types of insurance plans include HMO’s – health maintenance organizations. These types of plans typically require less out of pocket costs for the employee but can have less flexibility with the physicians and hospital choices. This type of plan requires you to choose a PC who will care for most of your healthcare needs. When a specialist is required, a referral from the PCP is obtained. Most likely you will also have more coverage, including more coverage for preventive services.

If you are an established company and are looking to switch health insurance plans or your company is in search of the ideal health insurance for your employees, it is important to choose your health insurance coverage wisely; being mindful of whom your employees are. If your staff is mostly young and healthy adults, you may want to choose a plan with a low monthly premium and higher deductible as often times these employees are less likely to use insurance on a regular basis.

Take the time to explore what plans could benefit your employees, while creating a healthy and thriving workforce. If the healthcare needs provided meet the employees’ needs, productivity, motivation, and attendance is greatly affected, and everyone remains happy and healthy!

Please feel free to contact a licensed representative at HRBC Insurance for the best guidance 1-877-651-7526. They are always willing to assist, especially when allowing you, as the employer, to enable your employees to have the best health plan options.

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