Why Your Group Benefits is not Level/Partially Self-Funded Right Now
By Tim Starr, CIC, CRM, CRIS, CWCA, AB; CEO of The Starr Group
In my 30 plus years in this industry I have never witnessed a time so ripe for businesses to take control of their health care costs. FINALLY! You can -- and you must -- take control now. That is, unless you simply have too much money and are satisfied with your employee recruiting results. Assuming you don't and you aren’t, read on.
As a business owner, healthcare is your 3rd largest spend -- Cost of Goods Sold and Payroll normally are 1 and 2. Interesting that Workers Compensation is usually 4th on the list, but you figured out a way to control that particular variable cost.
Why? Because it has an interest rate called your “Experience Modification Factor” and you've learned how to influence it to your advantage by affecting human behavior.
Hm. Can we do that in Healthcare? Why not? You've got the same people, just a different benefit program, right? Yes! So you need an agency highly capable of building a contingent wellness program tied to your level/partially self-funded healthcare program.
So, what’s holding you back? Two reasons!
First, Health Insurance companies prefer Fully Insured (FI) plans versus Level (LF) or Self-Funded (SF).
- They make more money in FI programs because there is little if any transparency with regard to THEIR true costs and YOUR companies real utilization results especially when you factor in what costs are allocated to their Reinsurers.
- It is estimated 43 cents of each $1 health insurance premium is a non-transparent cost like revenue sharing, kickbacks etc.
Second, your current agent or agency.
- Self-funded is an absolutely new language for agents and agency personnel. It is like learning Chinese when you speak English. Who wants to learn a new language if you do not need to -- or want to?
- It comes with a lot more risk to the agent and agency from a liability standpoint.
- The administration expenses inside an agency are a quantified 40% more compared to FI health insurance.
- All of the bonuses paid to agents and agencies from the FI health insurance companies start going away -- this is a huge variable!
- An agency MUST HAVE people in skilled positions to actuarially monitor your plans performance along the way so you would not be subject to large capital swings from month to month.
Is it time YOU break the chains and start taking control of your company's healthcare costs? You can't do that in a FI program even if you have a Wellness component.
Talk to a Starr Group Benefits producer who specializes in LF and SF creation. Allow us to gather the necessary data and even run side-by-side comparisons while your current benefits program is in force so you will get a clear picture and know the impact a custom SF program will have on your business' bottom line.