Fully Insured and Self-Funded Plans: The Pros and Cons

In our blog published a couple of weeks ago, we delved into the three different types of group health insurance plans: fully insured, level-funded, and self-funded. As you’re researching the best kind of group health insurance plan for your business, let’s focus on the two opposite ends of the spectrum and see how they compare: fully insured group health plans and self-funded group health plans.

Defining the plans

Fully insured

As a reminder, a fully insured plan is what people typically think of when they think of employer-provided health insurance. Employers purchase the plan from an insurance company (carrier) and pay a premium to the insurance company. When employees make a claim, the insurance company writes a check to the healthcare provider. Employees pay all the deductibles and co-pays.

Self-funded

In a self-funded plan, the insurance company provides all the administrative services, with a fixed cost for administrative fees. Self-funded plans are fully funded by the employer, who pays for employee claims from a bank account or trust fund set up for that purpose.

The pros and cons of fully insured health plans

Pros

Employers looking to keep their costs consistent will have fewer cost/rate variances month to month because of fixed premium costs.

All claims are managed by the insurance provider, which keeps the employer’s involvement in the day-to-day management at a minimum (and this also makes fully insured plans faster to implement). Employers also benefit from the insurance company taking on all the costs associated with employee medical claims. Employers and employees alike can feel confident knowing their premiums during the plan period will not change even if there are many claims in any one year.

Cons

While costs are consistent from month to month, employers must either accept the community rate if they’re a small group and or negotiate their rate with insurers each year if they’re a large group. Rates are determined with the following criteria in an underwriting process:

  • Company size
  • Employees’ health conditions
  • Claims experience (number of claims filed by employees last year)
  • Loss ratio (claims cost divided by the premiums collected)

These criteria can determine whether the following year’s premiums are higher or lower. Premium taxes are also higher with fully insured plans. And if you are looking for a plan with benefit design flexibility, fully insured plans often aren’t customizable to the degree an employer would prefer.

The pros and cons of self-funded plans

Pros

If the idea of assuming all financial risk sounds…well, risky, purchasing stop-loss coverage helps with those risks. You will also get additional savings if you have a low number of claims in any given year. Self-funded plans offer the greatest amount of flexibility and oversight, as you manage employee claims and can select which benefits you offer in your plan.

Cons

Not having the insurance company take all the risk when it comes to paying claims may leave you feeling uncertain about claims costs. Also, if your business does not have a stable cash flow, cost fluctuations due to employee claims can be stressful. Especially if you choose not to have stop-loss coverage, which can leave you potentially paying a great amount of money when it comes to employee medical claims.

While a self-funded plan is more hands-on, there are specific and additional compliance requirements such as non-discrimination requirements and 5500 tax filings. Also, as self-funded plans require a more hands-on approach, employers without the time or resources may find them difficult to manage.

Look at all sides

Fully insured and self-funded plans are two different sides of the coin. Be sure and take the time to talk to a trusted advisor to help you fully iron out the differences and take the next best step for you, your business, and your employees.

 

 

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Photo by stanciuc

Managing Workplace Conflict Like a Pro

Interpersonal conflict is something every workplace must deal with at some point. When people work in close quarters, there is bound to be some type of friction that comes to the surface and needs to be dealt with.

Sometimes the people in the conflict can work it out themselves. This usually happens if both people are willing and able to sit down and hash things out. However, many people are uncomfortable directly addressing issues and conflicts and will do anything to avoid uncomfortable conversations.

This results in passive aggression, negativity, decreased productivity, and team dysfunction, which can spread and begin to negatively affect other employees. Conflicts like these are best solved quickly, and strategically, and often guided by management.

Unfortunately, if leadership isn’t prepared to handle conflicts correctly, they can have a much greater negative effect on the situation and make it worse for everyone. Here are a couple of leadership practices guaranteed NOT to succeed in solving a conflict.

Evading

We know you’re busy. You’ve got a million things on your plate and goals and quotas to meet. So that argument between Tim and Kathy on the production team just doesn’t seem important enough for you to prioritize today. Oh sure, you’ll get to it, but it not today. Maybe tomorrow. Or next week? You’re hoping that maybe by then, it’ll just go away. Spoiler alert: it won’t.

Avoidance can come in many different forms. For instance, say you’ve talked to Kathy and Tim separately and heard their sides of the story, but you haven’t yet set up a meeting with both of them together. It might feel like you’ve made some progress after hearing them both initially. People often feel better after they’ve had a chance to get their story out and feel heard. This might have even deflated their frustration for the time being. But it won’t last.

No one likes to have uncomfortable conversations, and you’re no exception. Being in leadership doesn’t mean you’re automatically exempt from having the same reservations about confrontation as the rest of humanity. You may be a good problem solver and a good listener, but if you just stop having individual conversations and don’t move forward to confronting the issue together, you’ve halted the healing process.

Disconnection

Separating people when they are fighting might work with children, but it isn’t a sustainable solution for dealing with conflict at the office. Employees must be able to work together and rely on each other as a team. Just trying to give them different projects and hoping they won’t run into something that requires them to work together isn’t going to help you or them in the long run.

Listening to their individual stories and sending them in different directions is setting your team up for failure. Plus, it’s setting an unhealthy standard for how your company handles interpersonal conflict.

Lead them back together

Unless you take the step to get them talking face-to-face, you’ve just put the problem on hold, not dealt with it. Having a functional, healthy team should be a top priority for any leader. The chances of meeting your goals with a robust team working together are much greater than working with a dysfunctional team and their infighting.

Taking an hour out of your day today to solve a conflict will save you hours of cleanup work later on down the road. It’ll also ensure that the conflict doesn’t expand and begin to affect other team members.

Time to get constructive

If you’re uncomfortable with confrontation or not sure how to mitigate the conflict, it helps to go in with a plan:

  • Structure the conversation so both parties have their chance to speak and respond to each other.
  • Encourage them to each take accountability.
  • Set the expectation that they will come to a resolution, creating a clear, actionable plan for how they will move forward.
  • Set a follow-up meeting a week or two down the road to help keep everyone accountable.

You may never be comfortable with confrontation, but fortunately, with practice, you can get better at successfully dealing with it. The more you set the expectation that conflict will be dealt with in this way, the easier it is to do it. Hopefully, it becomes so ingrained in your company culture that co-workers will begin to do it themselves without the need to bring in leadership to help mitigate the discussion.

So next time there’s a conflict at the office, don’t hesitate to deal with it then and there. Don’t put it off, don’t avoid the uncomfortable conversation. Show them you believe in their ability to solve the problem themselves by bringing them together to do so. You’ve got this, and so do they.

 

Content provided by Q4iNetwork and partners

Photo by romastudio

It’s Time to Expect More from Your Broker

For most employers, the story is the same every year. They don’t hear from their benefits broker until renewal starts to appear around the corner, and then it’s spreadsheets, rising premiums, and more spreadsheets. The world of insurance is confusing and frustrating, and for many employers, this leads them to seek out second opinions from multiple brokers. Why wouldn’t you? Even if your goal is just to keep your current broker honest, it’s only common sense to get second opinions on a purchase that large.

But here’s the problem. Almost without fail, the brokers you talk to will get the same numbers from the carriers, bring in the same spreadsheets, and will likely tell you about their services, which are the same as every other broker. Benefits admin support, compliance support, HR services—the list goes on, and it’s almost always the same.

You still have to make that gut-wrenching purchase come renewal time, and you still feel in the dark about your options.

So how do you decide which broker to go with if everything they’re offering is the same? That’s where many brokers and employers alike would point to the “relationship” part of the business. They would say it all comes down to who you like the best.

But we disagree. There is a different kind of broker out there—one that doesn’t look the same as the rest and can offer you something different—something better.

What you really need

While every year you feel the same frustration and anxiety around having to make an extremely (and increasingly) expensive investment in your employees, how much do you really understand about why you’re making that particular purchase?

The reality is most employers simply don’t have enough real experience with the world of insurance other than that dreaded yearly renewal process. This leaves them at the mercy of their broker and relying on others to tell them what’s best for their business.

While this makes sense—the world of insurance is increasingly confusing and constantly changing—it’s simply not sustainable. What employers need is to have the power to make an informed and educated decision when it comes to their benefits plan. They need to have the kind of power only true understanding can bring.

How to differentiate

So it’s time to start looking for something different in your broker. Here’s how to spot it. While the benefits broker you’re used to will:

  • Only get in touch with you when it comes time to renew
  • Offer you the same spreadsheet and the same services every year
  • Assure you their service is the best and that’s what sets them apart
  • Hand you their non-insurance solutions and call it good
  • Completely fall off your radar once you’ve renewed

The benefits broker you want:

  • Shows up well before you have to start thinking about renewals
  • Starts off the conversation by uncovering your goals and challenges
  • Focuses on educating you about your options
  • Isn’t interested in forcing you to buy unless their solution improves your business
  • Continues to provide you with advice and education throughout the year
  • Supports the use of non-insurance solutions via training, communication, and education

The first type of broker wants you to buy from them and pick them out among the rest. While the second type also wants that, their first priority is to help you improve your business and make an impact in the lives of your employees. What you need isn’t a benefits broker—what you need is a benefits advisor.

Why?

So you can make the most informed decision for your business without blindly relying on a handful of brokers at renewal telling you the same thing over and over. So you won’t make the mistake of simply sticking to what you know just because you know it, passing over opportunities to make massive savings because you don’t understand them, and thus don’t trust them (yes, this really happens).

The world of insurance is growing and changing, and employers need to be able to grow and change along with it—and that requires employers to become educated about their situation and their options.

Expect more

The bottom line is you don’t have to settle for the same type of broker. In fact, you shouldn’t. You and the people your business supports deserve the best service and the best benefits available—and you can only get that by having the power to make informed decisions yourself.

Start expecting your broker to teach you. Start asking questions and expecting answers. Look for a broker who focuses on education, year-round communication, and who takes the time to help you fully understand all your options. You deserve more than the same old story. It’s time to expect a new one.

 

Content provided by Q4iNetwork and partners

Photo by Volodymyr Melnyk