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Group Health Insurance Options for Your Practice Self-Funded vs. Affordable Care Act Plans


W


ith fierce employee competition and staffing issues across the state, offering and maintaining the right group health insurance plan can attract talented em- ployees and strengthen staff loyalty and retention.


Health insurance is the top benefit employees want from employers in 2024, according to Forbes.com. Knowing your options and choos- ing the correct plan can save you a significant amount of premium, while offering a benefit your employees will find value in.


Affordable Care Act (ACA) plans are age banded, which would have negative effects for older employees. Rates will not be affected by medical conditions or claims within the group. ACA plans are typi- cally a better fit for groups with higher claims experience.


Self-funded plans are designed to help meet the needs of rising costs by allowing more flexibility. Plans can be built to meet the needs of the group, with hundreds of plans available. Groups are fully under- written. For a healthy group, premiums can be much lower than fully insured Affordable Care Act (ACA) plans. Depending on the demo- graphics of the group (medical conditions and average age within the group), ACA plans could be more appropriate.


Self-funded plans also have less regulation and taxation than ACA plans, however, both plans have compliance required by employers. Plan designs for self-funded and ACA can be very similar.


The table shows some advantages of both types of plans.


REQUIREMENTS Generally, the employer is responsible for 50 percent of the employee- only premium, depending on the carrier. The employer is not respon- sible for dependent premiums. All full-time employees averaging 30 or more hours per week are eligible for the plan. Part-time employees are not eligible.


Employers can start a group health insurance plan anytime through- out the year. I recommend putting the group through medical underwriting with at least two self-funded carriers and compare each offer to ACA rates. The higher rates, the higher the liability for the


20 focus | SPRING 2024 | ISSUE 1


Fully Insured ACA Plans


Adjusted Community Rated Individually underwritten


Groups can be denied coverage based on medical conditions


Financial protection if claims are higher than expected


Detailed claims reporting


Potential surplus refund if claims are lower than expected


Fixed monthly payments Claims considered at renewal


Ten essential health benefits required to be covered


Yes No


No


Yes No No Yes


No Yes


Self-Funded Plans


No Yes


Yes


Yes Yes Yes Yes


Yes No


employer, as the employer pays a percentage of premium. Again, if employees have a history of major medical conditions, ACA plans may be the best option for the group.


This article was written by Christy Diehl who is the MDIS Health Insurance Manager. Contact her and she will help you find a suitable plan to fit your needs.


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