Self-Funded Health Plans:
What Every Employer Needs to Know
The Rise of Employer Self-Funded Health Insurance
An increasing number of employers are turning to self-funded health insurance plans. This shift is driven by compelling factors that offer significant advantages over traditional fully-insured plans. As you are likely aware, premiums have escalated every year, with deductibles going higher, and often with coverage including fewer benefits. When we become a part of your healthcare strategy, Sensible MRI will save your company and employees thousands of dollars per year on MRI claims. (click/tap headings below to toggle info drop-downs)Instead of paying premiums to standard health insurance companies, employers fund their own plans—either partially or completely—and bear responsibility for any healthcare bills incurred by subscribers. Employers typically seek assistance from consultants, third-party administrators (TPAs), or health plan administrators when establishing programs to meet the demands of their employee populations.
TPAs assist companies in determining the level of stop-loss coverage required to cover extraordinarily high claims, depending on their risk tolerance and claim history. TPAs also design unique health benefit plan paperwork, choose appropriate provider networks, and administer the plans.
It is critical to choose a TPA who can coordinate all of these steps while keeping your best interests at heart. The procedure should be totally clear to you as the employer, with the goal of returning control to your hands.
Self-funded plans can provide greater flexibility, control, and cost-saving opportunities than standard fully insured plans, which require payment of a set premium to an insurance company to cover the expenses of care.
Self-funding enables smaller and medium-sized businesses to be far more flexible in the benefits they provide to their employees, tailoring plans to the needs of unique workplace populations. This flexibility can help to keep expenses under control by encouraging healthy behaviors and discouraging unnecessary healthcare consumption. Self-funding allows for increased involvement at the workplace level, making population management measures like smoking cessation or weight loss programs more easily adopted. High-value services, such as preventative care and medication adherence regimes, provide businesses greater control over positive outcomes while improving workers' quality of life and lowering expenses. Self-funding empowers companies by allowing them to use claims data to discover and effectively utilize low-cost providers.
Health plan administration costs are typically 3 to 5 percent cheaper than those associated with a fully insured plan, which ranges between 15 and 20 percent, according to the International Foundation of Employee Benefit Plans (IFEBP). Self-funded businesses can also avoid state premium taxes, which range from 1.5 to 3.5 percent depending on the state, as well as costly regulations on insurers' plans, which can increase plan prices by 5 to 7 percent.
Determining whether self-funding is appropriate for your organization requires careful consideration of several key factors. First, assess your company's size, financial stability, and risk tolerance. Self-funding is typically more suitable for businesses with a stable cash flow and the ability to withstand potential fluctuations in healthcare costs.
Next, evaluate your current healthcare expenses and employee demographics. Analyze historical claims data, if available, to gauge potential costs and savings under a self-funded model. Consider the age, health status, and healthcare utilization patterns of your workforce, as these factors can significantly impact the viability of self-funding.
Finally, it's crucial to consult with experienced benefits advisors or consultants who specialize in self-funded health plans. These professionals can provide valuable insights, conduct thorough cost-benefit analyses, and help you navigate the complexities of transitioning to a self-funded model. They can also assist in developing strategies to mitigate risks and maximize the potential advantages of self-funding for your specific situation.
Sensible MRI offers a self-pay rate* of $700. Based on MRI Medical Facility Charges** from April 2023 to March 2024, here are actual statewide average charges for common MRIs in Wisconsin.
- Spine CPT-72148: $3,880
- Ankle CPT-73721: $3,813
- Chest CPT-71550: $3,994
- Elbow CPT-73221: $3,856
- Abdomen CPT-74181: $3,880
- Lower Extremity CPT-73718: $3,873
- Upper Extremity CPT-73218: $3,685
Based on the above, Sensible MRI saves between $3,294 to $2,985 on every MRI performed!
* Businesses & referring providers, contact us for group rates.
** from Wisconsin Hospital Association Information Center (WHAIC) – Price Point