Using Self-Funding to Battle Clients' Health Care Costs

The debate over health care reform continues to make headlines. Insurance agents and the American public are more attentive to the intense discussions in Washington than in the recent past. Consumers feel that prices are high and on the rise, and they feel no one should be without insurance. Business is more global now than ever before; employers are trying to compete, but they are also dealing with concerns over rising health care costs.

As the debate continues, it is important for insurance agents to explore new opportunities and markets, and to provide promising solutions to clients. One opportunity to explore is offering self-funded insurance products to help fight rising health care costs and improve employees’ health. It’s a viable option for financing your client’s employee medical plan, and you can easily expand your book of business while increasing the bottom line and capitalizing on a relatively open market.

Stop loss insurance products are one way for self-funded clients to “cap” the cost of a self-funded medical plan, and to provide a plan budget that is realistic and actuarially sound. That budget allows them to set a cap on the expenses associated with the plan. Because of the cap and the possibility of expenses falling below, the opportunity to save money is very real versus fully insuring that same medical plan.

So, what are the benefits for an agent who offers self-funded products? For one, there is less competition within the agent community – providing a self-funded option shows your clients that you are providing a broad spectrum of options from which to choose.

Another benefit is that self-funding is local or regional. Administrators of self-funded plans (third-party administrators, or TPAs) are typically local or regional to you and to your clients. This provides local knowledge and service, lending valuable local knowledge and servicing of a medical plan.