Self-Funded Options are Available to Private Schools
We have found that private schools in our region, especially the Christian ones, have grown accustomed to doing more with fewer available resources. These institutions are so mission-driven that every person in the building is committed to delivering on their promises to their students, so they get creative with scheduling and staffing and with budgets.
Unfortunately, this scrappiness can sometimes lead to assumptions about what they can and cannot afford. Faced with ever-rising benefits costs, we have met with dozens of leadership teams who believe they simply have no option but to endure annual rate increases because of their size.
“We just aren’t big enough to do anything else,” they say.
This isn’t true. No matter how small the organization, you have more options available to you than you may realize.
Before we dive into what those options are, you should know that employee benefits plans are often divided into groups: Fully insured traditional plans and self-funded plans.
Fully Insured Traditional Plans
This is your classic employee benefits plan. The plan gives you coverage for a set rate, and you (as well as your employees) pay 100% of the premiums regardless of how much or how little the plan is used. At the end of each year, these plans typically increase in cost by 10 to 20% while employee deductibles and quality of coverage decline.
Under a self-funded model, you “pay as you go.” By directly managing your benefits plan, you pay for only what you use, giving you an opportunity to control the overall cost of your plan. Self-funded plans typically include a range of tools that enable employees to access better care but for lower prices.
Unlocking Rewards with Smaller Groups
Historically, larger groups have had the most success with self-funding because they are in a better position to absorb large claims. When smaller groups consider the possibility of self-funding care for an employee’s major illness or expensive prescription, the risk seems too high, so they go back to their broker and renew their traditional coverage.
We have clients with as few as 2 lives on self-funded plans, and that’s possible because of these tools:
- Stop-loss insurance – By capping your potential costs, stop-less insurance protects you from a bad year of claims so that you have stability and security at all times.
- Pharmaceutical programs – Prescription drug costs are one of the most common sources of high benefits costs, and we have tools that enable us to reduce (and sometimes eliminate) out-of-pocket costs to the employee while dramatically reducing the costs to the plan. For example, we have been able to provide $80,000 prescriptions for $30,000.
- Collective buying power – We use coalition and alliance models to bring several smaller schools together, giving everyone more negotiating power and better access to coverage,
- Direct medical contracts and reference-based pricing – In the benefits world, higher costs often do not equate to better care. We help your employees get the best possible care at fair prices, generating huge savings for your plan while giving them a better experience.
- Alternative delivery models – Benefits plans are full of waste. With telemedicine and prescriptions by mail, we can give employees more care at a lower cost.
- Progressive change – Your organization can gradually implement self-funded options overtime to make change more manageable for your leadership team. In other words, keep your plan but start saving at the same time.
- The right partner – The right advisor for your business will take your concerns seriously and collaborate with you to customize an approach that meets your needs.
Your Next Steps
You likely renewed your benefits plan recently, and that’s okay. Not only do we have options we can begin pursuing today to lower the costs of your current benefits plan, having more time between now and your policy renewal gives you more flexibility in your planning and your preparation. Next year, your benefits costs will go up. That is a certainty. But, if we start working together soon, we can unlock a new strategic advantage for your people without putting them at risk.