Benefits brokers play a key role in matching employers with Affordable Care Act (ACA)-compliant health benefits. A good broker considers every option. Assuming a broker wants to be the best in the business, self-funded health plans should be a standard offering. Every broker should have at least a few to throw into the mix.
Self-funded health plans are a health insurance alternative fully funded through employer contributions and payroll deductions. The plans are administered by third-party companies like StarMed.
Whether you are a broker, employer, or employee in need of affordable health coverage, self-funded plans should be an option. With that in mind, here are the top four reasons brokers should offer their clients self-funded plans:
1. They Help with Client Retention
It is no secret that tough economic times wreak havoc on small businesses that simply cannot afford another rate increase on their current health plans. If a broker cannot offer something cheaper, an employer may have no choice but to go elsewhere.
A self-funded plan is a low cost alternative to traditional medical insurance. As such, it can help with client retention. Clients planning to go elsewhere could be convinced to stick with their brokers by a self-funded plan that maintains compliance without breaking the bank.
2. They Are Ideal for Low Wage Industries
Self-funded health plans are ideal for low wage industries where the financial resources for health plans are limited. The hospitality industry immediately comes to mind. As a low cost alternative, a self-funded plan can meet minimum essential coverage (MEC) requirements while only placing a limited financial obligation on wage earners.
3. They Help with Prospecting New Clients
A good broker is always prospecting new clients in order to grow their book of business. These days, prospecting has more to do with offering affordable options than anything else. The truth is that traditional health benefits are getting far too expensive for many small businesses. But if that is all a broker offers, most of their prospecting efforts will turn up empty.
On the other hand, a low cost alternative in the form of a self-funded plan opens the door to new clients that would otherwise not be able to afford to offer health benefits. With a self-funded option in place, said employers do not have to pay the federal penalty for not providing ACA compliant coverage.
4. They Allow for Customization
There is one particular aspect of self-funded health plans that doesn’t get talked about as often as it should: the ability to customize plans according to individual workforces. The self-funded model is built on the understanding that groups of employees are different. Being able to customize benefits to each group is a big selling point.
The types of people who work in the hospitality industry are likely to have different needs compared to their counterparts who work in industrial environments. Technical workers have different needs than their medical industry peers. Customization offers the opportunity to tailor a self-funded plan to the exact needs of a company’s workforce.
A Word About Cost Savings
A quick word about cost savings is in order before we close this post. It has been our experience that employers looking into self-funded plans for the first time are doing so for the express purpose of saving money. That is not a bad motivation, but brokers do much better when they can articulate the four points laid out in this post.
Any benefits broker looking to maintain a solid business should have at least a few self-funded plans in the portfolio. Employers need that option. They want that option.