Rising healthcare costs are a challenge for organizations everywhere, making it harder to provide competitive employee benefits while staying on budget. Traditional employee benefits plans often come with high fixed premiums, leaving organizations searching for better solutions.
Alternative funding offers a smarter, more flexible way to combat these costs, helping organizations save money, customize benefits, and attract top talent.
Watch a quick video overview, or read on for more information:
What is Alternative Funding?
Alternative funding is a modern approach to financing employee benefits, especially health insurance. Unlike traditional fully insured plans, where employers pay fixed premiums to carriers, alternative funding gives organizations more control. It allows employers to design plans based on employee usage, risk tolerance, and company goals—often leading to significant cost savings and greater flexibility.
Here are some popular alternative funding options:
- Level-Funding Plans: Predictable monthly budgets that combine claims funding with stop-loss insurance for catastrophic claims.
- Self-Funding: Employers pay directly for employee healthcare claims, using stop-loss insurance to manage high-cost risks.
- Captive Insurance Arrangements: Groups of employers pool resources to self-insure collectively, spreading risks and costs.
- Reference-Based Pricing (RBP): Employers negotiate rates directly with healthcare providers, bypassing traditional insurance networks.
How Alternative Funding Helps Combat Rising Costs
Switching to alternative funding can unlock a range of benefits for your organization:
- Cost Savings: Pay for actual claims instead of high fixed premiums, reducing overall expenses.
- Customization: Tailor benefits plans to meet the specific needs of your workforce.
- Transparency: Gain clear insights into healthcare spending, enabling smarter decisions.
- Flexibility: Scale your benefits as your organization grows and evolves.
Is Alternative Funding Right for Your Organization?
While alternative funding offers many advantages, it’s not a one-size-fits-all solution. HR leaders should evaluate factors like:
- Workforce size and demographics.
- Financial stability and risk tolerance.
- Claims variability and potential high-cost risks.
- Employee understanding and engagement with benefits plans.
Why Now is the Time to Act
With healthcare costs continuing to rise, there’s never been a better time to explore alternative funding. By taking control of costs and customizing your benefits, you can support your organization’s financial health while prioritizing employee well-being.
Ready to combat rising healthcare costs? Contact Kapnick Insurance Group today to learn how alternative funding can unlock significant savings and transform your approach to employee benefits.
