Previously an attractive option for only certain large groups, self-funding of health care benefits has now become a feasible best-option for all group sizes given the new post-PPACA rate climate.
Rate increases associated with Metal plans, combined with PPACA taxes and fees, are driving the cost of group health benefits high enough for most employers to seek an alternative--for which self-funding is ideally suited when combined with stop-loss insurance to limit the employer's financial exposure.
Self-funding of group health benefits eliminates certain PPACA taxes and fees, and delivers rates which are based upon the specific group's experience rather than the "pool" based Metal plan rates, and this can result in considerable savings during a group's first year. What happens, though, in subsequent years when stop loss rates are based on the group's experience and claims may be high? The rates for the self-funded coverage will also increase-- but at percentages which may not be as much as insured coverage, or which may not deliver year-over-year savings, but deliver a financially-favorable solution long-term.
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