Contact Information: Contact: Henry Stimpson Stimpson Communications 508-647-0705 Henry@StimpsonCommunications.com Jim Edholm Business Benefits Insurance 978-474-4730 jedholm@bbibenefits.com
Reining In Health Insurance Premiums -- Bay State Employers Can Use Partial Self-Funding
Creative Strategies Can Meet Stringent New State Requirements, Says Broker Jim Edholm of Business Benefits Insurance
| Source: Business Benefits Insurance
ANDOVER, MA--(Marketwire - December 17, 2008) - In a tough economy, Massachusetts employers
need creative strategies to keep a lid on healthcare costs, says veteran
broker Jim Edholm, president of Business Benefits Insurance in Andover.
With "partial self-funding," the employer pays small, routine claims while
the insurance company pays infrequent, big ones, he says.
It's allowed under the state's healthcare law, but you have to meet new
requirements that take effect on Jan. 1, 2009, Edholm points out.
Self-funding used to make sense only for big organizations. But the
availability of insurance plans that limit the employer's risk now makes it
feasible for medium-sized and even small companies with as few as five
employees, providing they meet carrier health requirements.
Moreover, if the employer is willing to share risk with its carrier by
selecting a lower-cost plan and reimbursing employees when they run up
significant out-of-pocket costs, it can achieve savings even with large,
brand-name carriers.
For instance, a 10-person company can use either partial self-funding or
reimbursements to save more than $29,000 a year, shaving about 33 percent
off its healthcare premiums, Edholm says. (A comparison table is
available.)
The downside of partial self-funding is that the employer takes on a bit
more risk, and if the employees have an unusual run of bad luck with
illness or accidents, the projected savings may not materialize.
"You have to look at your employee population. If they're healthy,
self-funding is a great way to save without reducing coverage," Edholm
says. "The odds are high that you'll do better by taking on a little more
of the risk yourself."
Business Benefits Insurance (www.bbibenefits.com) is an employee benefits
planning firm. Edholm has counseled employers more than 25 years.