Lydia Coutre writes for Crain's Cleveland Business about how and why small to midsize companies are making the switch to self-funding, despite the risks.
Read the full article at: www.crainscleveland.com
“Every year, everyone dreads shopping for the next plan (during) open enrollment,” said Andy Lembach, CMO of Spooner, Inc. “And you get a bunch of quotes from people, you go with the cheapest one, and then the next year they jack up the rates, and then you’re in this viscous and you’re doing it all over again. There’s seemingly no control.”
Last year, Spooner, which employs about 130 people, switched to self-funded health insurance, a model in which an employer provides health benefits to employees with its own funds. It’s typically a cheaper option, but the employer then assumes the risk for paying claims, versus the traditional fully insured model in which insurance carriers bear that risk.
Is self-funding worth the risk? It could be, as employers using this model do not have to comply with some time- and resource-consuming provisions of the ACA. Small employers with typically healthy workers can switch to self-funding with less risk than larger employers or those with an employee base with more health risks.
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