News
     Sep 30, 2009 CDHP adoption rate rose among big employers, despite the economy
     Sep 16, 2009 Employees like their health plans, despite gaps in understanding
     Sep 10, 2009 Obama proposes controversial employer mandate, public option
     Sep 1, 2009 Hospital cracks down on ER visits
     Aug 20, 2009 COBRA enrollment soars, reports Hewitt
     Aug 11, 2009 NY law seen as harbinger of more state health reform
     Aug 4, 2009 Near-term health trends familiar, irrespective of reform
     Jul 21, 2009 Employers lukewarm on public-plan option, survey shows
     Jul 17, 2009 House committee approves health reform bill
     Jul 15, 2009 Senate committee passes health reform bill
     Jul 7, 2009 ‘Pay or play’ not as painful as originally thought
     Jul 1, 2009 Five costly conditions to watch
     Jun 30, 2009 Americans go online for health information
     Jun 23, 2009 Pennsylvania passes mini-COBRA law
     Jun 16, 2009 Health benefits taxation takes center stage
     Jun 8, 2009 Obama alters stance on health reform proposals
     May 28, 2009 Mail trail shows health insurers readying for reform
     May 19, 2009 Health care costs hit women harder
     May 7, 2009 To see a doctor, get in line
     May 1, 2009 Considering the exit ramp: Employers rethink offering health benefits
     Apr 23, 2009 Hard times tighten ‘use-it-or-loss-it’ bond to health benefits
     Apr 13, 2009 COBRA subsidy expected to be costly
     Apr 6, 2009 Workplace wellness bill reintroduced with greater support
     Mar 24, 2009 New COBRA model notices released
     Mar 10, 2009 Twelve ways to slash medical bills
     Mar 1, 2009 Self-insuring is a way for employers to get 'a whole lotta cannoli'
     Feb 23, 2009 Employers turn to eligibility audits, voluntary benefits to control health care costs
     Feb 11, 2009 Senate, House debate COBRA subsidy
     Feb 3, 2009 Dems optimistic on comprehensive health reform
     Feb 1, 2009 How's this for an incentive? You get to keep your health insurance
     Jan 27, 2009 Medicare reimbursement shakes things up
     Jan 20, 2009 Health benefit costs continue to rise, survey shows
     Jan 13, 2009 N.Y. proposes policy requiring employers to extend dependent coverage
     Jan 1, 2009 Health care reform to take center stage this year
     Dec 16, 2008 Employees cut back on health costs - for better or worse
     Dec 1, 2008 Moderating health care costs could signal trouble ahead
     Nov 25, 2008 Tobacco addiction costs employers $167.5 billion a year
     Nov 18, 2008 Benefits professionals favor drastically reworked employer-based systems in new administration
     Nov 11, 2008 Employers urged to flex muscle on health care reform
     Nov 4, 2008 Obesity epidemic remains a battle
     Nov 1, 2008 Evidence shows positive outcomes from greater investment in primary care
     Oct 21, 2008 Losing sight of wellness program goals
     Oct 14, 2008 DOL seeks comments on how health plans use genetic data
     Oct 1, 2008 More patients heading to the emergency room
     Sep 23, 2008 BFE: Up your FMLA ante with these helpful tips
     Sep 15, 2008 Companies combat high HMO premiums with aggressive strategies
     Sep 8, 2008 Steady support for wellness and disease management
     Sep 1, 2008 Chronic conditions afflict more than half of Americans
     Aug 12, 2008 HHS wants wellness program advice
     Aug 1, 2008 Attention all shoppers: How to be a smart PBM shopper
     Jul 15, 2008 Parties stand far apart on health care reform
     Jul 10, 2008 Benefits to protect— and add— during economic downturns
     Jul 1, 2008 Seven Self-Insurance Myths
     Jun 24, 2008 Growth of employer medical costs projected to accelerate
     Jun 15, 2008 Pushing the envelope: Zero tolerance on tobacco use
     Jun 1, 2008 A new direction for health care reform and HMOs
     May 27, 2008 What's next for health care reform?
     May 20, 2008 Ohio, W.Va. and Pa. say no to CDHPs, survey reports
     May 6, 2008 Health plan study shows performance varies region to region
     May 1, 2008 Benefits finance: Is a self-insured health plan right for your company?
     Apr 29, 2008 HHS Secretary Leavitt backs value-based health care
     Apr 22, 2008 Obesity costs employers $45 billion a year
     Apr 10, 2008 Want to reduce sick days by an average of 41%? The solution is easy. Just walk.
     Apr 1, 2008 Robust incentives may improve retention rates in wellness programs
     Mar 25, 2008 Mercer Report: Employers focus on generic and specialty drugs to reduce Rx costs
     Mar 11, 2008 How to make your PBM more accountable
     Mar 6, 2008 Americans alarmed by gaps in quality health care delivery
     Feb 21, 2008 PBMI launches career center for drug benefit industry
     Feb 12, 2008 Business group wants to reduce health disparities among minorities
     Feb 5, 2008 Using incentives for health risk appraisals
     Jan 31, 2008 Mid-size employer turns to "hybrid" CDHP model
     Jan 15, 2008 Employees take advantage of wellness resources - when they're available
     Jan 8, 2008 Consumers are in the dark on health insurance terminology
     Jan 1, 2008 Checking the label: Transparency, generics utilization key components to effective PBM relationship
     Dec 18, 2007 Group counters belief that benefits sky is falling
     Dec 4, 2007 Touting large-scale ideas for health reform
     Nov 20, 2007 Health benefit costs still outpace the rate of inflation
     Nov 8, 2007 Toolkit outlines best practices in health coverage for mothers, children and adolescents
     Nov 1, 2007 Communications, wellness prove challenging for HR
     Oct 15, 2007 HealthMarkets charged with misleading customers and denying required care
     Oct 4, 2007 Is your company prepared for a pandemic?
     Sep 25, 2007 Focus on health plan design paying off for employers
     Sep 15, 2007 iPhone puts consumers' health records in the palm of hand
     Aug 23, 2007 Health insurers are starting to focus on value-driven plans
     Aug 9, 2007 California to produce first PPO report card
     Aug 1, 2007 Chicago museum makes walking exhibit grounds cornerstone of successful, no-frills wellness program
     Jul 24, 2007 Health care costs top employer concerns
     Jul 12, 2007 Benefit professionals react to Moore's depiction of health care
     Jul 1, 2007 Creating wellness incentives that resonate with workers
     Jun 21, 2007 Health insurance inflation is slowing down
     Jun 15, 2007 On the contrary: Employers not looking to shift costs
     Jun 1, 2007 Can't we all just get along? Achieving successful benefits integration with multiple carriers
     May 17, 2007 Employers shift focus to prevention
     May 17, 2005 Employers shift focus to prevention
     May 8, 2007 Fortune 500 firms push for health reform
     May 2, 2007 Biotech drug costs skyrocket
     Apr 26, 2007 Experts help small firms with health plans
     Apr 18, 2007 Group says health premium jumps should be justified
     Apr 5, 2007 HMOs more cost-effective in California
     Mar 20, 2007 CVS buys Caremark
     Mar 6, 2007 Americans value e-health services
     Feb 22, 2007 Top-rated hospitals have lower mortality rates
     Feb 5, 2007 Participation in wellness programs grows
     Jan 25, 2007 Country reacts to Bush health care proposal
     Jan 16, 2007 FMLA ruling protects subsidiaries
     Jan 10, 2007 Latest CDH trend may be plan attrition
     Jan 3, 2007 Tool helps employers keep up with the "Joneses"
     Dec 20, 2006 Majority unaware of medical costs
     Dec 13, 2006 Bill makes HSAs more flexible
     Dec 5, 2006 Half of CDHP users would switch plans if possible
     Dec 1, 2006 Health inflation lower, but worries grow over "fraying benefits"
     Nov 30, 2006 NBGH launches free guide to preventive care
     Nov 16, 2006 Medical costs may show double-digit increase in 2007
     Nov 7, 2006 Most workers do not use FSAs
     Oct 25, 2006 PBMs keeping up with Wal-Mart
     Oct 17, 2006 Consumers prefer generics to brand drugs
     Oct 11, 2006 Workers worried about future of health benefits
     Oct 1, 2006 Dental providers embark on new ways to offer benefits
     Sep 20, 2006 Questions remain about provider quality programs
     Sep 15, 2006 Cheaper Zocor throws generic market a curveball
     Sep 6, 2006 HSA assets surge over past six months
     Sep 1, 2006 Consumers get more tools to gauge medical costs, quality
     Aug 31, 2006 Workers motivated by richer benefits
     Aug 24, 2006 Bush compels price and quality transparency in health care
     Aug 17, 2006 Workers uneasy about pay, health care
     Aug 9, 2006 HMOs account for one quarter of insurance market
     Aug 1, 2006 Generics influx drags prescription drug trend to seven-year low
     Jul 25, 2006 Depression costs related to health care access
     Jul 12, 2006 Research shows effects of quality ratings for surgeons
     Jul 6, 2006 Employers portend scaling back retiree medical benefits
     Jun 20, 2006 Tips for CDHP roll-outs
     Jun 15, 2006 Ohioans recoup $6.5 million in health claims
     Jun 8, 2006 Not-so-great expectations for health costs
     Jun 1, 2006 Vermont latest state to pass health reform
     May 30, 2006 Study gauges health data gap
     May 17, 2006 Most employers do not offer DM, wellness, but they want to
     May 10, 2006 Declining employer-sponsored health plans documented
     Apr 27, 2006 Workers build muscle with incentives
     Apr 25, 2006 Change coverage to lower pregnancy cost
     Apr 20, 2006 Health experts face off on access vs. innovation
     Apr 15, 2005 Target draws bead on consumer-driven health care
     Apr 11, 2006 Female employers worry about skyrocketing health costs
     Apr 5, 2006 Mental health benefits add value, not cost
     Mar 27, 2006 Validate your health ROI to the CFO
     Mar 21, 2006 Variety of strategies needed to curb health costs
     Mar 9, 2006 Managers doubt CDH will make workers healthier
     Mar 1, 2006 Health care to account for 20% of GDP by 2015
     Feb 23, 2006 Higher co-pay differentials increase generic fill rates
     Feb 14, 2006 Consumer advocates worry about health data privacy
     Feb 7, 2006 Cost and talent issues challenge benefit professionals
     Jan 25, 2006 More than half of seniors stay away from Part D
     Jan 15, 2006 Mind the Meds: Top 10 pharmacy benefits management strategies for 2006
     Jan 2, 2006 Put your health care eggs in many baskets
     Dec 14, 2005 CDH participants dissatisfied but frugal
     Dec 8, 2005 Health care banking gets the Blues
     Dec 1, 2005 Generic drugs offer employers untapped savings
     Nov 29, 2005 Care management, cost-shifting reduce health costs
     Nov 17, 2005 Pay-for-performance generates quality improvements
     Nov 15, 2005 Employers should examine full impact of obesity
     Nov 3, 2005 US CEOs more health care cost conscious
     Nov 1, 2005 Health cost relief takes center stage at BMF&E
     Oct 25, 2005 Wal-Mart extends lower-cost health insurance
     Oct 11, 2005 Large companies find lower health care hikes since 1999
     Sep 21, 2005 Cost-shift trend is also costing brokers
     Sep 15, 2005 Financial incentives touted as health care cost fix
     Sep 8, 2005 PBM mail-order pharmacies deliver cheaper drugs
     Aug 31, 2005 A spoonful of compliance helps health costs go down
     Aug 18, 2005 AutoNation claims UnitedHealthcare overpaid by $10 million
     Aug 16, 2005 Consumers elevate HMOs over PPOs
     Aug 9, 2005 Medical cost containment depends on changing habits
     Aug 2, 2005 Employers could see relief in benefit costs
     Jul 26, 2005 PBMs scoop up specialty pharmacies
     Jul 15, 2005 Off and running: Self-funded employers may have head start in push for wellness
     Jul 5, 2005 Walgreens says drug costs rose 7.2% in 2004
     Jun 28, 2005 More than half of employers concerned about wellness
     Jan 21, 2005 Benefit managers offer best ways to ease health costs
     Jun 14, 2005 UnitedHealth has a million in consumer-driven plans
     Jun 9, 2005 Uninsured worsen medical inflation for workers
     Jun 1, 2005 New study puts medical costs into focus
     May 24, 2005 Disease management has become the norm
     May 10, 2005 Unions found to have better access to health insurance
     May 4, 2005 Employers don't lie down for higher premiums
     Apr 28, 2005 Mandatory health insurance rejected in California
     Apr 21, 2005 GM says health costs partly to blame for first-quarter losses
     Apr 12, 2005 Group launches program to buy health insurance in bulk
     Apr 7, 2005 Maryland considers bill that mandates benefits spending
     Mar 25, 2005 Many would sacrifice choice for lower health costs
     Mar 15, 2005 State health mandates scrutinized
     Feb 9, 2005 Scandals may prompt more online insurance bidding
     Jan 19, 2005 Employers should investigate disease management math crimes
     Jan 12, 2005 Clients tackle medical inflation roots
     Jan 8, 2005 Employees prefer work-based insurance
     Dec 21, 2004 Automated Systems For Drugs Examined
     Dec 14, 2004 Companies Rapidly Cutting Health Benefits
     Dec 2, 2004 40 Percent in U.S. Use Prescription Drugs
     Nov 1, 2004 Your New Health Plan
     Sep 27, 2004 Health costs rising faster than incomes, study says
     Sep 13, 2004 Employers slow shift of health care cost burden to workers
     Aug 10, 2004 Health care costs employers more than paid leave
     Jul 15, 2004 Health insurers lost $85 billion to fraud last year
     Jul 22, 2004 Health and productivity management intrigues firms
     Jun 4, 2004 Rising benefit costs hurt small businesses' financial health
     Feb 28, 2004 Strike-weary grocery workers eye new offer
     Feb 28, 2004 Experts ponder limitations of cost-sharing
Benefits finance: Is a self-insured health plan right for your company?

No matter what size your company is, you've probably wondered if you could profit from self-funding your health insurance.

It's no secret that higher deductibles on other insurance products can reduce your fixed costs and give you a chance to be in control of your own claims destiny. Will it work for health insurance, too? Be sure to look before you leap.

Smaller companies should seriously consider self-funding, but this option is underutilized by them. Unfamiliarity with the concept, their brokers' inexperience or a fear of large claim losses...whatever the reason employers fear self-funding, they should give it serious consideration.

Important questions
Here are 14 questions to ask when mulling the self-funding option.

What are the advantages of self-funding? You're practically guaranteed to save money the first 12 months. Your claim payments will start in the second or third month, so you save 12 months' premiums while only paying 10 or 11 months' claims. You, not the insurer, keep the money for the "incurred but unreported claims."

Unlike what you're currently doing, you don't pay premium taxes on your total premium. You only pay taxes on the stop-loss premium, which is less than half of your current premiums.

You can change your benefit provisions to make your plan specific to your group's particular needs. You can profit directly from disease management and similar programs.

But is self-funding for me? Your employee demographics will tell you. Are they healthier, thinner and younger, with fewer smokers than average? Are you a risk-taker by nature? If either or both are true, self-funding could be attractive for you.

What makes self-funding worth consideration? You've heard of the 80/20 principal: you get 80% of your results from 20% of your efforts. It applies in health insurance, just as in everything else. The healthy 80% overpay and effectively subsidize the sickest 20%. If you're willing to carry more of the risk for your group, and your group alone, self-funding can help you profit from that willingness.

What pitfalls should I watch for? Your cash flow can fluctuate significantly, so be sure to maintain adequate reserves.

Moreover, make sure your broker understands the aggregate and specific stop-loss policies' contractual provisions. His or her stupidity can cost you more than planned. Some brokers try to make self-funding look good by providing limited-protection policies, which reduces fixed costs, but increases risk.

What do you mean by self-funding? Actually, the correct term should be partial self-funding. You're not going to pay all of your company's health claims. Rather, you partner with a stop-loss insurer. You pay the small, frequent claims, and the carrier pays the larger, infrequent and unaffordable claims.

Do many companies self-fund their health insurance? One study suggested that 90% of companies with more than 200 employees would profit from self-funding their health insurance. However, only 75% of such companies take advantage of it. Another survey showed only 41% of companies with 100 to 250 employees self-funded. But of those who use self-funding, more than 70% have done so for multiple years. It must be working for them.

Do I need to be a large company to self-fund? No, companies as small as 25 employees can potentially self-fund, and even smaller companies can create a "do-it-yourself" self-funding.

Does self-funding involve a lot a risk? Not if you use stop-loss insurance policies to limit your risk to a level that you're comfortable with.

What are the components of self-funding? You establish a claims account and authorize a third-party administrator to draw money from it to pay claims. So you pay claims plus their fee.

You also purchase stop-loss insurance to cover claims above a certain level. When any given claim reaches a trigger level, called the stop-loss point, the administrator begins paying with insurance company money instead of your money.

Is self-funding complicated? No, but it's different, and you have to familiarize yourself with new terms and risks. If your broker is knowledgeable, it's no more complicated than traditional insurance.

What if someone gets seriously and expensively ill? Oh, they will, sooner or later. It's called a shock claim for a good reason. But that's why you bought that stop-loss insurance policy. It will cover those catastrophic claims and stop one person's misfortune from ruining the entire plan's results.

What if a lot of people get sick? If lots of people get sick, you'll certainly pay more. But besides buying specific stop-loss insurance for catastrophic claims, you can also purchase an aggregate stop-loss policy, which will protect you against the cumulative cost of many smaller claims. Doing so always lets you know in advance exactly how much your plan will cost in both the worst-case and best-case scenarios.

Will I save money every year? Unfortunately, no. However, you'll probably either save money or break even in four out of five years. Typically, you'll save about 15% to 30% of your fully insured plan's cost in the good years. In the very worst year, you may spend 15% to 20% percent more than a fully insured plan would have cost.

What if self-funding doesn't work out? You return to traditional funding. There are some terminal costs (called runout) that typically recapture all the money you saved in the initial three-month period, but you're not generally going to lose coverage.

When you properly plan for it, self-funding can work for companies of surprisingly small size. Evaluate your alternatives carefully. This is a tool you shouldn't ignore.

By Jim Edholm
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