A number of businesses are currently debating as to whether they will continue to offer their employees health insurance plans as they have been, or adopt modes of health insurance now that health reform is changing. With the new Patient Protection and Affordable Care Act, there are several problems beginning to greatly affect the health plans of the past, ones that have worked for several decades. A new way to potentially shift into a new system that works for all parties is the self-funded or partially self funded health insurance.
It might be helpful to define what each of these plans are, and why they may or may not work best for a small business or independent company. Employer self-funded health insurance is an arrangement where the employer is solely responsible for the payment of insurance premiums to cover their employees and applicable dependents. The employer assumes the risk for both payment of the claims for benefits. There are ways that a business can protect itself from excessive claims, such as a stop loss insurance from the carrier. Generally, only large companies can afford this flexibility as they have much larger teams of staff to manage. A partial plan is one in which a company only pays a portion. All other costs associated with the insurance premiums would then be the responsibility of the employee. More often than not, we have seen partial plans be the standard way of handling insurance for most small to mid-sized businesses.
Self-funded health insurance would help eliminate the responsibility of the employer to provide for their employees by simply acting as an organizing body to sign their employees up for a group plan. The financial responsibility to pay the premium would be solely on the part of the employee. This shifts many employees to consider other options outside their place of work.
There are, however, new benefits for the employer self-funded health insurance option. To help stabilize the overall costs of insurance premiums and bring affordable healthcare to more people, small businesses may be able to reap the benefits of tax incentives and lower premium payments by taking on the responsibility of their employees health insurance payments. It is particularly helpful for businesses with under fifty employees. If you run a small business, it may be worth speaking to your staff or human resource team to discover what the best possible options are for you as a company.
Source: Smart Business