What are the benefits and drawbacks of partial self insured health insurance?
Less than 3% annual increase year after year? Often either a 0% increase or even a reduction (?!) in annual premium? Savings in growing cash reserves that you control and gain interest on? Ability to increase benefits to staff such as a $0 deductible, while actually lowering their monthly insurance costs? Avoid the risks of self-funding and nightmare scenarios such as “million-dollar babies” and chronic illness which wipe out reserves?
Do you know the lowest savings for a client switching to a partially self-insured plan? Approx. $18,000 annually while increasing benefits (group of 32) up to $400,000+ saved annually (for a group of ours with 380 people in it). *
We wrote this article specifically for international agencies, such as relief and development, community development, aid organizations, non-profits and charities, NGOs, Bcorporations, mission organizations and sending agencies, and other social businesses/social entrepreneurs with staff residing overseas as expatriates.
We refer to partially self-insured plans with some form of backing by traditional insurance as “partial self-funded plans.” This can be confusing, since “partially self-funded” can cover a range of options where an organization shares in some of the risk or costs and/or uses either insurance or reinsurance to protect them against larger risks. Whichever terms you use, these hybrid options offer you the best of both worlds without the risks associated with self-funding. We will not, however, be using the term “partial self-funding” to refer to self-funded health plans that have reinsurance/stop-loss insurance – These are self-funded plans pure and simple. See our infographic explaining these options here: https://www.gninsurance.com/wp-content/uploads/2014/03/Business-person-self-funded-insurance.pdf
* The results cited are based on the 10+ year track record of our consultants. Good Neighbor Insurance was getting ready to offer self-funded options for overseas businesses when we formally partnered in January 2014. We expect to see similar results by clients following their plan design and recommendations.
WHY PARTIAL SELF-INSURING MAY BE THE ANSWER
“Partially self-funded/self-insured” group health insurance may have the greatest number of benefits and the least amount of risks, as well as the greatest potential to save your organization money of any health insurance option currently available to you. Yet partial self-insured health plans are relatively unknown among international organizations. We highly recommend these types of health plans as the “best of both worlds,” since they represent “the Golden Mean” of international health insurance. We’ll explain why below.
Key advantages and benefits of a partially self-insured international health plan:
Partially self-insured plans have many of the same protections and benefits that you would have with traditional fully-funded insurance – They assume full risk, manage claims, and offer one contact person when you have a question or claim, versus many if each member is currently responsible for their own insurance.
They also automatically enroll all new members/employees (and their families) in your health plan and offer the advantage of standardization of benefits, deductibles,…
A key advantage is that you control your own reserves, and drastically reduce “trend increases” at renewal time which historically average 12-14%. (Our clients average 3% and many far less, based on the success of following the plan design we’ll help you set up. For more on this see http://www.youtube.com/watch?v=5olKWMR-vy4)
Another key benefit is the ability to consistently, dramatically grow your reserves and control those reserves, even lowering your annual premiums year over year. This reflects good stewardship and will get the attention of your Board of Directors as your healthcare costs rank consistently lower than the market, without entailing much risk to the organization or bank account. Your goal may be to use these reserves to transition to a self-funded plan, or simply use reserves to lower health insurance costs to employees, or to “level off” costs so that reserves pay for any yearly healthcare increases, rather than passing costs on to employees.
These types of partially self-funded/self-insured plans use insurance carriers to not only carry the risk of catastrophic or chronic claims, but also to administer claims (TPA) and gain access to their vast medical resources and knowledge of hospitals, doctors, adjustors, translators and more worldwide to guarantee your staff the best care possible and also protect you against fraudulent claims or unnecessary charges. Self-funded clients do not have this service available to them.
Using a carrier also frees up your staff to handle other Human Resource-related tasks rather than dealing full-time with healthcare administration. This time savings should be factored in when comparing the cost savings to a self-funded plan. Rarely can a company be self-funded without at least one FT person being assigned to administration.
The drawbacks of a partially self-insured health plan:
Group considering partially self-insurance should have at least 20, and even better 50 or more, full-time individuals or family members on the plan overseas to make it feasible. For some smaller groups this may mean getting on a traditional international plan until we can transition you into a partially self-funded/self-insured plan.
Underwriting. Since partial plans still use insurance carriers to balance/take on the majority of the risk, not every group qualifies for underwriting, nor would it make sense if your group is primarily older, or have had a rough couple of years of claims history.
If you’re not sure, contact us and we can do an actionable analysis.
You will need to consider what reserves you have available to start as well as your risk tolerance. While you are far more protected under a partially insured plan than a self-funded plan, there is still the matter of risk, which must be addressed.
The last drawback to consider is the ability to retrain your overseas staff to how they understand their benefits and how they use their insurance benefits. This may take a little time, although we have had great success when employees see the savings in their paychecks and incentives that we will suggest in your specifically-designed plan.
The key to any partial self-funded/self-insured plan is plan design. Especially for international organizations trying to save money. We have a proven track record of saving organizations like yours money with years of experience is plan design.
Good Neighbor Insurance have some of the most experienced consultants to advise you on exactly what partial self-insuring options are available for international organizations, how they work, and how to create a plan design to actually increase employee benefits, build up your cash reserves, while lowering your overall employees health insurance costs all at the same time, this year!
Whether you use partial self-funding/self-insuring as a stepping stone to becoming self-funded after you build up enough reserves, and become more educated/experienced with the processes and costs, or are perfectly happy with the savings, control of reserves and flexibility you have with a partial insurance plan – we’re happy to help.
As stated above, on average our groups have seen no more than 3% cost increase year over year and many are much lower than that. This is due to proprietary plan design and knowledge of both the market and international expertise helping overseas groups save. We would love to put this experience to work for you. Call us to set up a free consultation or fill out our census at:
https://www.gninsurance.com/group/Request_A_Group_Insurance_Quote.asp so that we can begin to understand your needs and goals.
We have helped hundreds of international non-profits and businesses like yours over the last 16+ years and are well-known by our 10+ carriers and by organizations just like yours worldwide. When you consider the level of trust we have built with numerous carriers, our expertise with partial self-insured plans, and our ability to create a plan design for your staff that will save you money this year and every following year, we believe you’ll be glad you called, and will refer other to our services as well.