As health care costs continue to escalate, employers are faced with a strategic challenge: How do they offer employee benefits without costing themselves a fortune?
To plan properly, mid-sized employers need alternative solutions to manage their health care costs, while attracting and retaining talent. In our view, two of the most effective approaches in achieving those objectives are self-funding or a private exchange.
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The Self-funding Option
For companies with a healthy employee demographic, a growing or stable workforce, and favorable claims experience, self-funding can be an excellent long-term solution to control costs. Self-funding provides potential savings through reduced administrative and regulatory fees, decreased taxes, and improved cash flow. With a self-funded model, the employer assumes direct risk for the payment of claims, rather than contracting with an insurance company to cover claims costs.