1 minute read
As an employer, I suspect you look at your health insurance costs and just shake your head…
WHY does it cost so much?????
I also suspect you haven’t yet received good answers.
Here is what it boils down to:
Ultimately, YOU are the insurance company…
…fully-insured, level-funded, self-insured… doesn’t matter, it is all the same pie.
For those of you that have between 100-500 employees:
I regularly hear “We are too small to be self-insured. We can’t handle all of the risk.”
You are CORRECT, a mid-size employer cannot handle all the risk.
However, if you are responsibly self-insured, you are not absorbing all of the risk. You are absorbing the expected risk and passing the unexpected risk off to a reinsurance or stop loss carrier.
The same as your insurance company does now.
This is the benefit to you:
Many years, the actual claims are lower than the expected claims.
If you are self-insured, you keep those unspent funds in your pocket.
On the bad years, or for the one or two large claims that happen, the reinsurance carrier will pay for the excess claims.
Want to know how we got into this crazy mess?