Alternative solutions must be implemented if self insurance is going to provide the savings

They say that in life history repeats itself. When it comes to healthcare this statement is a never ending true statement. The resurgence of self-insured products for small group is entering the marketplace as a result of the Affordable Care Act of 2010.

Not too long in the past, the insurance companies would argue that self-insurance had no place in the small marketplace under 100 employees. Some would even argue that claims experience could not be credited or recognized unless the group was over 250 employees.

Today as we consider the full implementation of the law in 2014, now self insurance is the alternative for small businesses with as low as 10 employees. Insurance companies are now offering the administrative fully insured health model but carving out the claims. So businesses can pay for administrative cost which encompasses all fees, plus claims cost with a maximum liability.

This design was offered back in the late 80’s, early 90’s, and although at first seem to be a solution to lower cost, resulted in higher cost and eventually taken off the marketplace. Employers must become more involved in their quest to provide healthcare to their employees if they are going to self insure.

Self insured only works when there is a commitment from both the employee and employer. Alternative solutions can enhance and lower claims and must be implemented if self insurance is going to provide the savings. Just changing the plans from fully insured to self insurance will not provide the long term saving for employers.

The initial savings is the 2 to 2.5% of premium that fully insured plans must pay under the new law. The employers are now liable for the claims up to the maximum liability and the administrative cost are bundled. True Self insurance policy should disclose all fees in order to negotiate the best rates.