We’ve researched the most frequently asked questions about self-funded health plans and had these questions answered by insurance professionals. Here are the most common questions people have about self-funded health plans and making the switch.
What is a self-funding employer health plan?
Simply put, the employer will be in charge of the company’s group health care plan. Also, the employer is responsible for making the monthly payment. In most cases, the company must have at least two employees to qualify for a self-funding health plan. If your employees are in good health throughout the year, the business owner may receive money back at the end of the year. Please keep in mind that plans may vary from state to state. Moreover, there are different types of self-funding plans.
Do states regulate self-funded plans?
No. Self-funded plans are regulated by the federal government. When employers provide funds for a health care plan, they have to follow the rules of The Employee Retirement Income Security Act (ERISA) of 1974.
Will the plan cover pre-existing conditions like the Affordable Care Act (ACA)?
Before selecting a self-funded health care plan for employees, direct this question to the potential insurance provider.
How do my employees sign-up for a self-funding plan?
Work with a licensed health insurance agent in your community. The agent will send you a spreadsheet. Answer the questions in the spreadsheet. Send the spreadsheet back to the agent. The insurance underwriters will make a final decision.
Is the self-funding plan a guaranteed issued plan?
No. The insurance company will provide enrollment forms. This is how the underwriters pre-screen a group. Insurance companies know that it is not always possible to obtain all medical information. Therefore, it is important to communicate with the agent and the insurance underwriting department.
How will the company determine the rates for my group of employees?
In a self-funding plan, the insurance company project claims based on current known employee medical conditions. Also, rates are calculated with the expectation that the employer will receive funds from the plan at the end of the year.
What happens if the enrollment status changes during the year?
The rates may change based on the number of employees that are still enrolled in the plan.
How long does it take to approve a self-funding?
The days to underwrite a plan depends on several factors. The insurance companies have different requirements. If all the paperwork is submitted accurately, the case can take about a week to underwrite.
Why should I use a self-funding plan for my small business?
The business owner will have more control of the plan’s costs. Self-funding plans cost less and can help improve profits. This plan is an alternative to the Affordable Care Act plans. Price is based on claims during the year.
What happens at the end of the year?
At the end of the benefit year, the employer may receive a check from the insurance company. The insurance companies also offer services to help keep the employees healthy during the year. For example, telemedicine is an option in some plans.
How do I protect my company against expensive claims?
In most self-funded plans, the insurance company will offer stop-loss insurance. This rider will pay for claims at a specific dollar amount.
Finally, there are many more reasons why small businesses should switch to self-funding health insurance plans. You can get the best information by contacting agents in your community that specialize in self-funding health insurance plans.
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