Getting From Point A to Point B

When it comes to health insurance for your company, there are three main ways to do it: traditional (fully insured), hybrid (level funded), and custom (self-funded). Each one is like a different kind of car that can take you from Point A to Point B, and when one can’t get you where you want to go you can change the vehicle. In this article, we'll learn about these three ways and see which one might be best for your job.

Traditional (Fully Insured): 

Fully insured health plans are like a regular daily driver. You pay a set amount of money each month to the insurance company, you think you know what to expect, and they take care of everything. This way is easy because you know how much you'll pay each month and you expect the rate to go up year over year no matter what.

Pros:

• You know how much you'll pay each month

• The insurance company takes care of everything

• You don't have to worry about how much you spend on claims
  

Cons:

• The price goes up every year and benefits (usually) go down

• You can't change how the insurance works

• Your employees are paying extra out of pocket when they actually need care

Hybrid (Level Funded):

Level funding is like a hybrid car, you have gas and electric working together to make your gas stretch further. You pay a set amount each month, and if you don't use all the gas, you might get some money back. This way, you can save money if you don't spend more than you planned on.

Pros:

• You know how much you'll pay each month

• You might get money back if you don't use all the insurance

• You can make some changes to how the insurance works

• You take on the responsibility of making sure it’s the best plan possible

Cons:

• Sometimes, you might have to pay more if you spend more than you planned on

• You can't change everything about the insurance

• You take on the responsibility of making sure it’s the best plan possible

Custom (Self-Funded):

Self-funded health plans are like a fully custom car. You can make it just how you want and if you figure out a way to make it more efficient than a hybrid or traditional car you might get money back. This way, you can save money and make the insurance work the best.

Pros:

• You can make the insurance work just how you want

• You might save money if you plan well and teach your employees how to spend smartly

• You can customize how your employees pay for care when they need it

• You take on the responsibility of making sure it’s the best plan possible

Cons:

• You take on the responsibility of making sure it’s the best plan possible

• It's a lot of work to manage the insurance when you don’t have the right co-pilot

• It might not work for small companies with few people

Choosing the right vehicle for health insurance is important for your company. Each way has good things and not-so-good things. By learning about them, you can pick the best one for your company and the people who work there.

References:

Kaiser Family Foundation. (2021)

2021 Employer Health Benefits Survey. https://www.kff.org/report-section/ehbs-2021-section-1-cost-of-health-insurance/

National Business Group on Health. (2020) 

The State of Health Care in America: 2020. 

https://www.businessgrouphealth.org/resources/the-state-of-health-care-in-america-2020

Kaiser Family Foundation. (2021). Self-insured employers. 

https://www.kff.org/uninsured/issue-brief/self-insured-employers/