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by Tony Novak, updated February 2,2014
Rising health insurance costs and the anticipation that health care reform are predicted to accelerate premium cost inflation in coming years has triggered more small business employers to consider self-funded health care plans as a more attractive option than fully insured health plans. The ability to cut the insurance company out of the equation can have dramatic cost-saving effects for a business with healthy employees.
The data supporting this strategy are compelling: total medical claims of healthy plan member average substantially less than $1000 per year while the average annual health insurance premium is more than $7,000. In contrast, less than 15% of unhealthy individuals, most of whom are not full time workers of small businesses, account for the majority of the nation's total health costs. This leads many small business owners to conclude that there may bemore efficient ways to help cover employee health espenses.
This short article summarizes the advantages and disadvantages of pursuing a self-funded strategy.
Freedom Benefits designs and helps with administration of self-funded and partially self-funded plans for small businesses. See www.freedombenefits.net/business for more information.
This web site is independently owned and managed by Tony Novak operating under the trademarks "Freedom Benefits", "OnlineAdviser" and "OnlineNavigator". Opinions expressed are the sole responsibility of the author and do not represent the opinion of any other person, company or entity mentioned. Tony Novak is not an agent, broker, producer or navigator for any federal or state health insurance exchange but may provide uncompensated advice, reviews and referrals to these official resources. Novak is compensated as an accountant, adviser, affiliate consultant, marketer, reviewer, endorser, producer, lead generator or referrer to some of the other commercial companies listed on this site. Information is from sources believed to be reliable but cannot be guaranteed.