Medical, pharmacy and other health care costs continue to
pose significant financial challenges for employers of all sizes.
Employers who elect to self-fund their health care benefits are exposed to even greater levels of risk resulting from large claims, inefficient program management and other factors.
Plan modeling is highly dependent on past experience and trends, but several factors may make a switch to self-insurance a better strategic decision:
+ Risk appetite and philosophy should ultimately determine whether self-insurance is the “right fit”.
+ A client may prefer to take the risk and be “responsible” for their own outcomes.
Unknown Rate Increases, Fixed Costs
+ Actual cost comparisons are highly dependent on fully-insured rate increases, which are not yet available for next year; high rate increases often follow poor experience.
+ Self-insured fixed costs are highly dependent on stop loss premiums, which are currently unknown.
+ Favorable claims experience often follows adverse experience.
+ If self-insured, a client may have more control over implementing cost containment programs for their specific population.