Market fluctuations and complicated legislation make healthcare costs a constant concern for both small and large companies. The Congressional Budget Office estimates that premiums for employer-based family coverage will increase 60% by 2025, reaching a total of $24,500.
In the last three years, medical expenses have steadily grown at a rate of 6.5% per year. The average family health coverage spending (which was $18,142 in 2016) is reason enough for companies to look for cost cutting strategies while also juggling their business objectives, employees’ expectations, and state regulations.
Switching to self-insurance programs instead of the traditional insurance plan is an excellent way to reduce your costs and add value to your company and your employees’ lives. Studies have shown that self-funded plans can reduce costs by 10 to 20%.
Although the benefits are significant, a lot of small businesses think that only large companies could benefit from self-funding due to the financial risk it implies. There’s a chance the employer will have to face a large bill they can’t cover if a worker has medical issues they didn’t include in the personalized health plan. What they don’t realize is that you can minimize these risks by purchasing stop-loss or excess loss insurances from insurance carriers that reimburse the employer for claims that exceed a certain amount.
The following are just a few reasons why companies should choose this alternative over traditional insurance plans.
3. Cutting Edge Solutions
4. Lower Premiums for Employees