Without its employees, your business is nothing but an idea. If you have a team of highly-qualified, deeply-engaged people working for you, you’ll generally go a lot further than you would with a team of middling performers. The best employees also tend to be the people who have the most job options. Someone who has an incredible resume, glowing references and a long list of skills and certifications may be able to be picky about where they work. Not only do you want those employees coming to work for you, but you also don’t want them going to work for your competitors. To get them on your team, you’re going to have to offer competitive health benefits. Employers considering going the self-funded route often wonder if they will be able to offer appealing healthcare benefits.
In fact, self-funding may help some employers attract those high-quality candidates. More and more employers have moved into self-funding in recent years. This arrangement requires a self-funded employer (also called a self-insured employer) to pay its claims directly instead of paying premiums to an insurance carrier. Stop-loss insurance is generally paired with a self-funded plan to cap the employer’s financial risk, since most organizations can’t afford to pay high-value claims out of pocket.
Attracting Employees as a Self-Funding Employer
As you know, the quality of their health benefits is a top concern for employees of all ages, backgrounds and industries. In Glassdoor’s 2018 survey, 63 percent of employees and job seekers said that benefits were one of the top things they looked for while reading job ads. And in Glassdoor’s 2015 survey, 80 percent of employees said they would prefer additional benefits over a salary increase.
An employer doesn’t necessarily have to offer the biggest salary or the most exciting job description to get top employees to choose them. If your dream job candidate has been frustrated by insufficient health benefits at previous jobs, or has young children to take care of, your health plan may be the deciding factor that gets them to say yes to working with you.
In terms of attracting and retaining the kind of employees you want, having a self-funded health plan may work to your advantage in a few ways.
- Flexibility is one of the top reasons why employers choose self-funding, and it can also be a boon for the employees covered by a self-funded plan. This health insurance strategy allows employers to design their own plans instead of having to choose from plans designed by an insurance carrier. Customizing your own plan lets you meet the needs of your specific workforce, taking into consideration factors like employee lifestyle.
- Self-funding employers can access their own plan data. Tracking where your dollars are going and how employees are using their benefits gives you an advantage over employers with fully-funded insurance. At the end of each policy year, a self-funding employer with a self-funded plan can make adjustments based on its plan data and feedback from employees. This allows you to make informed decisions about adjusting your plan. If you need to trim costs, you can cut services that employees don’t use and allocate your health care dollars to cover the things that they value most. With each passing year, you’ll have more data with which to fine-tune your plan.
- During the interview process, when potential new hires ask about benefits, you can speak about your employee-focused approach to plan design and your commitment to improving the plan each year. If you solicit employee feedback about your health plan, you may be able to point to real changes that you made in response to that feedback. That kind of employer responsiveness could be another selling point for some job seekers, especially those who have been frustrated by previous employers.
The potential to reduce health care costs and improve cash flow are often what draw employers away from fully-funded insurance and to a self-funded plan. Don’t discount the employee satisfaction piece of self-funding. At a time when so many workers are prioritizing health benefits, offering a plan that’s based on your real workers’ real needs could help you stand out.
To be clear, self-funding is not the best choice for all employers. Some are better served by a more traditional health insurance arrangement. The predictable costs and minimal risk make fully-funded insurance attractive for certain businesses. Explore the pros and cons of all your options before committing to self-funding.
Stop Loss Insurance Brokers works with every self-funding client to find the stop-loss solutions that work best for both the employer and its employees. We understand the weight of every decision you make around employee health benefits, and we’re here to help you make the right ones.
I’m always here to answer your questions about stop-loss and self-funding. Contact me today!
Denise Doyle is the President of Stop Loss Insurance Brokers, Inc. She has over 30 years of experience in the industry and is a member of Self Insurance Institute of America.