Fully insured, Level funded, Self-funded – Moving employers through

In almost all cases, the first step to moving toward a high-performance plan is to move away from fully insured plans to either a level funded or self-funded chassis — key steps to unlocking data that can drive insight and action. In certain rare cases, the first step may be identifying high cost areas and adding specialty management solutions to address those. If you can access the full claims data sets, that is the ideal path. The alternative is to have the entire employee base complete health questionnaires.

The next step is to ascertain where the company is at and what factors will influence the type of plan and plan design that best fits their situation. Here are some of the factors that we recommend considering:

• How many members does the plan have?
• What are the avg. industry margins and/or company’s net margin making them more sensitive to health premium spikes?
• Does the plan sponsor have a paternalistic culture?
• Does the plan sponsor highly value their workforce?
• Does plan sponsor require average employees to be highly skilled to be competitive in their industry?
• Is the plan sponsor in a highly competitive industry?
• What is the level of competition to attract and retain talent company faces?
• Is the business family-owned? Are there any outside investors?
• Are there any foreseeable exits, company sales, acquisitions, capital raising transactions, or IPOs?
• What is the avg. salary at the plan sponsor?
• What is the avg. employee tenure in years?
• What is the plan sponsor leadership’s general comfort with perceived risk? How much of a variation from expected outcomes will they accept?

Based on your assessment of where the company is at, you are then able to review available options and present the benefits and drawbacks of each. If you have only written fully insured plans historically, we highly recommend engaging another advisor as a co-pilot. Ideally, the advisor is someone with extensive experience working with self-funded plans, as a poorly designed plan (including how vendors work together and data flows) can create issues for your client.

For employers who are not ready to move off of their fully insured plan, it can be helpful to walk them through the costs and explanations in the example below.