By Nomi Health on April 24, 2023
It’s no secret that the cost of healthcare for both employers and workers is becoming unreasonable. And unfortunately, there doesn’t seem to be an end in sight. Research shows that 7 in 10 employers expect moderate to significant increases in what they pay for healthcare benefits over the next 3 years. Healthcare costs are expected to rise by 6% this year, after the 5% increase seen in 2022.
Is there an alternative to the unruly year-after-year increase in expenses? One solution that many companies are trying out is a self-funded healthcare plan.
In a self-funded healthcare plan the employer provides health or disability benefits to employees using the company’s own funds. This means that the employer assumes the financial risk and responsibility for providing healthcare benefits to employees. While there is more risk involved, there are several advantages to these types of plans.
When going the route of self-funding, employers have more control over selecting, tracking, and coordinating the vendors they use. They also have the ability to negotiate prices and try out new vendors when something is not working.
When self-funding, employers get access to detailed claims data and can make informed decisions about where and how they spend their money. Every year they can dial in on which procedures are costing them and their employees the most money. They have visibility into which medical procedures drive the most expense and find the right solutions to curb those higher costs.
Unlike traditional plans, where you have to just take whatever is in the package you buy, with self-funded plans, employers can customize their plans to meet the specific needs of their employees. Some examples of things employers can customize include which network they use, deductibles, and prescription coverage. Employers can also add additional benefits wherever they see a need.
This is a huge advantage because with traditional plans there is no benefit for the employer when health claims are lower than expected. With self-funding, the employer retains those funds and can reinvest them the next year for more cost savings.
Self-funding can be less costly than traditional plans for a few reasons. There are no profit or risk margins to pay an insurer, and there are no state-levied premium taxes. Also, thanks to the access to data on claims and usage, employers can identify trends and opportunities for cost savings.
Self-funding healthcare plans can be a great option for employers and organizations looking for a way to reduce benefits costs, gain better insight into where expenses are going, and provide tailored benefits for their specific group of employees.
If you’re interested in learning about Nomi Health’s Open Network and how you can leverage this solution for lower prices and better outcomes for your company, check out this page. You’ll see how we help provide high quality health care to your members at a fraction of the costs with direct contracting.