The Affordable Care Act: To Self-Fund or Not To Self-Fund

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Healthcare costs are skyrocketing. Insurance premiums are on the rise. And too many businesses fail to look closely at the option of self-insuring and thereby turning an operational expense into a strategic asset. Self-funding healthcare is advantageous, sensible and compelling for the gain.

There's a tendency afoot in the business world to view the Affordable Care Act, a.k.a. Obamacare or ACA, and its copious rules and regulations as an additional burden of higher costs. But for savvy corporate executives who always see the proverbial glass as half full, the ACA spells o-p-p-o-r-t-u-n-i-t-y.

"There have been dozens of changes to the law since its passage four and a half years ago," states Craig Lack of Premium Reduction Strategies. "Let's face it, an election was just held, and given the results, it's unlikely the changes are about to slow down any time soon." Alterations in healthcare insurance strategies don't concern those in the C-suite; CEOs, COOs, CFOs and the rest, who have embraced turning this potential hardship into a real corporate asset. "It all begins with addressing whether or not a business entity manages the healthcare capital allocation as an investment or a liability," referring to self-insurance and the Spousal Incentive HRA Plan.

Call it revolutionary, but self-funding has been around since the passage of the Employee Retirement Income Security Act of 1974. The Self-Insurance Institute of America, the only national association dedicated to representing legislative and regulatory interests of the alternative risk transfer industry, is based in South Carolina and supports a legislative and government office in Washington, D.C.

Perhaps self-insurance has not received the attention it's now getting because the level of uncertainty and escalating healthcare costs have never been so prominent. Another possibility is simply that companies have not taken time to investigate the idea that they can run healthcare benefits like they run a company, transforming a liability into an asset. And then there's changing the way of doing business. This is where folks who dig in their heels can be reminded of Warren Bennis' oft-quoted statement: Success in management requires learning as fast as the world is changing.

In an article published Nov. 17, 2014, in The Washington Post, reporter Aaron Gregg writes: "Self-insurance, in which businesses go off the traditional insurance grid and handle claims on their own, has become more popular among large employers over the past 15 years. But as new provisions of the Affordable Care Act take hold, some benefits professionals are starting to recommend self-insurance as a way for small businesses to dodge new costs associated with the law."

Specifically, the ACA IRS Notice 2013-54 creates an extraordinary opportunity to use Obamacare as a competitive advantage. By employing this provision, organizations across America can capitalize on the Spousal Incentive HRA Plan to eliminate claims from their self-funded plans. While conventional wisdom recommends risk reduction, risk mitigation and risk transfer, the most powerful risk management strategy is the elimination, or at the least minimization, of risk.

Hesitation often lies in risk. But risk lurks around every corner, with every product that goes out the door and every employee who shows up. The commute to and from work is risky. The key to a successful transition is finding the expert who knows the intricacies of healthcare insurance options in terms of business management strategy and can seamlessly blend the two so a company realizes significant savings, along with a new transparency in its healthcare costs.

In general, large employers have adequate financial resources to cover health care costs, while medium and smaller ones purchase "stop-loss insurance" to reimburse them for claims above a certain dollar amount. This is an insurance contract between the stop-loss carrier and the employer, and is not deemed to be a health insurance policy covering individuals. Self-insured companies can administer claims in-house, though most subcontract this to a third party administrator, also known as TPA.

"Healthcare is either a strategic asset or an operational expense," emphasizes Lack, also co-author of the best-selling book Think & Grow Rich Today. "Solutions are flexible and practical enough to be implemented in most self-funded organizations without changing what's already working with administration, brokerage and the insurer already in place."  Self-insurance permits employers to custom-tailor plans to meet its workforce needs, maintain financial control of employer and employee contributions and eliminate state mandates, because self-insured programs are regulated under federal law.

It's time to seriously contemplate managing health plans like one conducts business. When Bill Clinton said: The price of doing the same old thing is far higher than the price of change, little was known about just how fitting that statement would be, with regard to investing in healthcare, more than a decade after his presidency.

Contact Info:
Name: Craig Lack
Email: Send Email
Organization: Premium Reduction Strategies
Phone: 888-636-3744

Release ID: 68794

Name: Craig Lack
Email: Send Email
Organization: Premium Reduction Strategies