As today marks National Insurance Awareness Day, we wanted to share some current trends in the insurance landscape and considerations for businesses. Healthcare costs have skyrocketed for employers, it is estimated in 2023 that healthcare will cost employers $13,800 per employee.1 Over the years, as we have moved in an unaffordable direction, employers are increasingly turning to self-insurance as a mechanism for risk management and control over costs.

In simple terms, fully insured plans consist of employers paying a monthly premium directly to an insurance company to cover their employees (and dependents).  On the other hand, with self-insurance, employers take on a set portion of the financial risk of a program instead of paying a fixed premium amount. In 2022, 82% of firms with 200+ workers adopted insurance plans that were wholly or partially self-funded.2 Why is self-insurance so popular today? Here’s a quick snapshot.

Pros:
  • Lower potential healthcare costs in the long-term
  • Greater customization and flexibility
  • Provides faster, more detailed data to drive action
  • No change to employee experience
  • Recoup insurance carrier profit
Cons:
  • Requires more attention and in-house resources
  • Increased risk
  • Medical stop-loss coverage is highly recommended to avoid catastrophic claims impact

If you are thinking of transitioning to a self-funded insurance model, or have questions about medical stop-loss, please check out our alternative risk financing services overview, or get in touch.

1 https://www.healthcarefinancenews.com/news/health-benefits-costs-expected-rise-54-2023#:~:text=Average%20costs%20for%20U.S.%20employers,to%20professional%20services%20firm%20Aon.
2 https://www.statista.com/statistics/985306/self-funded-health-insurance-covered-workers-by-firm-size-us/