Any of these describe your current situation?
- You’re an HR director, or you’re doing the work of one, whatever it says on your LinkedIn
- You need to hire more people make more revenue, but crossing the 50 employee mark will add almost 50% to your cost of each employee, because now you’ll have to pay health insurance as well as salary
- You’ve seen your HR industry colleagues watch their company plan’s deductibles and premiums go up year after year and you don’t want that
Most people think they’re stuck with the off-the-shelf health plan options on a price list their broker brings them.
But instead you could buy healthcare like industry insiders buy healthcare.
Employers who self-fund their health insurance (don’t worry; it’s not nearly as intimidating as it sounds!) save up to 30% compared to traditionally-insured premiums
Impact Beneficial has 3 goals in designing your health plan:
- Save up to 30% on insurance premium costs
- Give your employees access to high-quality doctors (yes, even the one ENT who wrote the paper on doing this one test under the highly unusual conditions you need to replicate your symptoms the way they happen in the real world, the one who takes no insurance) with $0 out-of-pocket cost
- Get your employees access to their medications at a better price than the big guys
The secret? Honestly, it’s building relationships with TPAs (health claims processors, negotiators, and so much more) who love to beat the system and share the wins with midsize businesses like yours–for the money, sure, but mostly for industry bragging rights.
That and deals with local pharmacies to keep Austin (and Texas) weird and medication prices low compared to your typical Big Five formulary.
The Impact Beneficial self-funding method
Self-funding works like most people intuitively think insurance works–you pay your premiums into a pile of money, and then when your employees go to the doctor, it files a claim against that pile of money and that money goes to pay the doctor.
The advantage is that when you self-fund and you have a good year where everyone’s healthy– (–ish; maybe someone’s kid sprains his ACL playing football and has to go about in a high-end walking brace and get tons of physical therapy, but that’s what insurance is for, and maybe someone has a chronic disease and needs a specialty drug on the regular, but we’ve found you and them a good price for the drug because that’s what brokers and good PBMs are for) –you get to keep the savings instead of the insurance company using them to pay off shareholders or buy another pharmacy chain.
As for when you have a bad year, insurance companies don’t actually absorb all the cost of major illnesses either. Insurance companies pass some of their excess risk off to other insurers. Stop loss insurance is insurance for insurers. And yes, really, the price of stop loss insurance plus the price of the vendors who run your health plan (someone to process claims, someone to do your pharmacy negotiation, assorted customer service, plus your broker to put it together and sometimes serve as expediter when you hit a weird edge case your insurance company normally wouldn’t help you with) are often less expensive than one of the Big Five insurance carriers.
So when you have a bad year, your stop loss carrier has got your back.
How self-funding works and what you actually do
Send your broker a census of your employees, exported from your HR software. (Most people like Excel–or rather, most insurance carriers can use an Excel file, so for compatibility reasons, most brokers will be happy with an Excel sheet.) They’ll tell you what needs to be in it, but common required components are:
- Names
- Dates of hire
- Zip codes (addresses for enrollment, but zip codes are fine for quoting)
- Dates of birth
- Current coverage if you’re already offering insurance
- Sex assigned at birth (they might ask pronouns on an enrollment form, but they’ll underwrite based on your chromosomes)
- and a bunch of information about your company–tax ID, physical location of the company even if everyone works remote, SIC code (lots of people don’t know this last one; don’t worry, if you don’t know, I’ll help you figure it out)
Decide on who’s eligible for your company’s health plan:
- Just full-timers? (In Texas, people who work 30 hours or more per week are full-time. Past 50 employees, you have to offer this.)
- Part-timers? (You have the option to extend coverage to people who work 20+ hours a week if you like; it is not a requirement. However, if you offer coverage to one part-timer, you must offer it to all part-timers.)
Decide how long your wait period is before employees become eligible to enroll in your health plan. This can be any time period from first-day coverage to 90 days after enrollment. Wait periods generally reflect whether you have very high or very low turnover, with lower turnover businesses having shorter wait periods.
Your enrollment period itself, after employees are hired, must be at least 31 days from their start date in Texas, so that employees have at least one long month to decide whether they want coverage and get their paperwork together.
Tell your broker what’s most important to you in your health plan. (A specific drug? If you don’t know what meds your employees need, there are anonymized ways for your broker to ask them. Specific doctors? The ability to see literally any doctor, with no network at all? $0 copays for doctors within the network? Membership medicine where they can text their doctor? Something special about mental health? Something esoteric they’ve never thought of?)
They’ll build you plans that focus on that, and sometimes some other options for cost comparison.
This will consist of, at minimum
- a Third Party Administrator (TPA), who will negotiate medical prices and process your employees’ medical claims
- a Pharmacy Benefits Manager (PBM), who will negotiate drug prices and process your employees’ pharmacy claims
- and a stop loss insurance carrier.
There may also be a direct or virtual primary care membership, or other services that you ask for. Your broker will go over options with you and you’ll pick one, and then have an enrollment where employees opt into the plan, or pick a plan if you offer more than one.
About your Texas Impact Beneficial broker
I’m Delle, your self-funding focused Austinite health insurance broker on a quest to abolish networks and get your employees their specialty meds at a price lower than their rent. Also a slightly disabled healthcare high utilizer, so I have personally done all the network exception requests, cash pay bundles, and other games of trying to get The One Effective Treatment paid for, and am here to hold your employees’ hands if they have to do the same.