When addressing employee benefits, organizations often find themselves at a crossroads, faced with the decision of how best to fund these essential offerings. While many brokers may predominantly highlight fully insured plans, there exists a rich spectrum of funding options that can provide tailored solutions suiting the unique needs of each company.
In this post, we will explore the various funding options available, focusing on the benefits they offer to both the organization and its employees.
Key Funding Options
The funding spectrum can encompass a variety of strategies, each designed to cater to different organizational needs, financial goals, and risk tolerances. Here are the primary funding options:
- Fully-Insured Plans: Traditional insurance where the employer pays a fixed premium to a carrier.
- Level Funding: A hybrid approach that combines elements of fully insured and self-funded plans to mitigate financial risks.
- Group Benefit Captives: A collective insurance arrangement where multiple companies share risks and expenses.
- Partially Self-Funded Plans: Employers self-fund a portion of the risk while purchasing stop-loss insurance to cover high claims.
- Self-Funded Plans: Employers assume full responsibility for their employee medical claims, retaining a greater degree of control and potential cost savings.
The Shift Towards Self-Funding
Recent trends indicate that over half of U.S. workers are now covered under self-funded medical plans. This shift highlights a growing recognition of the advantages self-funding presents, particularly for larger organizations. However, companies of all sizes can benefit from exploring alternative funding options that align more closely with their financial strategies and employee needs.
Case Study: Finding Success through Self-Funding
To illustrate the transformative impact of alternative funding solutions, consider the case of a growing professional services firm with 150 employees. Faced with the challenge of escalating health insurance costs, this organization sought a sustainable solution that would maintain both employee satisfaction and financial health.
With the expert guidance of their Kapnick benefits advisors, the firm made the strategic decision to self-fund their medical expenses. Fast forward three years, and the results are compelling: they have successfully saved $760,000, equating to 15% of their previous health insurance expenditure.
This case exemplifies how thoughtful analysis and consideration of funding options can lead to substantial savings and improved benefit offerings.
By understanding the full spectrum of funding options, and considering innovative solutions like self-funding, companies can not only alleviate financial pressures but also enhance employee satisfaction. If you’re ready to explore how alternative funding strategies can benefit your organization, our team at Kapnick is here to assist you in navigating these opportunities for success.
