Highlights
- Self-funding offers a more affordable approach to health insurance for small businesses.
- When considering alternative health insurance arrangements, perceived self-funding challenges may make you hesitant to switch.
- Understanding these challenges and how to combat them can help you embrace self-funding for better coverage and cost savings.
- Roundstone is a leader in self-funded group captive insurance and can help you transition smoothly for cost-effective coverage.
Self-funding is a cost-effective health insurance choice for small to midsize businesses (SMBs), offering savings and customized coverage. This option gives you more control over your insurance but can also mean more risk and the challenge of handling claims yourself. That’s why self-funding has traditionally only been accessible to Fortune 500 companies with a sizable employee pool for risk predictability and the internal resources to handle claims.
Fortunately, innovation is changing the game — and finally making self-funded health insurance accessible to small and medium-sized businesses.
While self-funding may seem inaccessible due to limited resources and specialized knowledge, Roundstone offers a novel approach that makes self-funding easy. Our group captive model minimizes risk and gives you a dedicated team to help design, implement, and maintain a cost-effective insurance plan.
Learn how we can help you overcome self-funding challenges to see improved cost savings and better health for everyone in your organization. Affordable insurance that still delivers quality benefits is finally in reach for small to midsize businesses.
Self-Funding With a Group Captive
Pioneered by Roundstone in 2005, the self-funded group captive model is a specialized type of self-insurance for health coverage traditionally used in areas like property and casualty insurance. Roundstone adapted the model for health insurance, providing an innovative solution for small businesses.
In a group captive, also known as a stop-loss captive, multiple companies come together to form a collective insurance pool. This shared approach helps distribute the risk of expensive claims among all members, making costs more predictable and manageable. Each company contributes to the fund used for claims, allowing members to customize insurance coverage to meet the needs of its employees.
For more information on how group captives work, see our article, You’re In Control: Group Captives Offer Freedom of Choice.
6 Self-Funding Challenges and How to Overcome Them
Moving from traditional insurance to a self-funded plan can be daunting, especially when faced with challenges like risk management, administrative complexity, and cost predictability. Roundstone understands these hurdles and offers tailored solutions to address them.
Here are six common self-funding challenges and how Roundstone can help you overcome them.
1. Risk Management
With self-funding, a major concern is high-cost or catastrophic claims, like an unexpected serious illness or an expensive medical procedure. When you pay for these costs yourself, it’s natural to worry about their impact on your company’s healthcare budget, or how you will afford them.
At Roundstone, we address the risk of high-cost claims through stop-loss insurance. When you join, your plan will include this coverage, which steps in to pay any claim amount that exceeds a predetermined threshold. This feature protects your business from large, unexpected expenses, mitigating financial risk. Stop-loss insurance makes self-funding a safe and predictable solution to high healthcare costs.
In our group captive model, the sharing of risk among all members also leads to more predictable costs for your business and reduces your individual risk exposure. This provides a safety net against high-cost claims and ensures cost stability, giving you peace of mind in your health insurance strategy. Under a group stop-loss captive, you gain risk predictability because your company is pooled with many small to midsize businesses like yours. The Captive covers thousands of lives, so you can self-insure with the same confidence as a Fortune 500 company, even if you only have 25 employees.
2. Complexity and Administration
Managing a self-funded plan can seem overwhelming due to its administrative complexity. Handling claims processing or staying compliant with health regulations can feel impossible if you have limited resources or lack specialized knowledge or training.
The Roundstone approach to self-funding eases these challenges for SMBs. We provide a streamlined administrative platform, taking the hassle out of managing your plan. Our team of experts, typically including a third-party administrator (TPA) chosen by you, deals with claims management, ensures compliance with applicable laws, and creates plan documentation.
We recommend working with Bywater, our in-house TPA, though you are free to work with any TPA you choose. Or we can make a recommendation from our list of vetted TPAs if you prefer.
This support alleviates the administrative burden, allowing you to concentrate on your core business activities while still being in charge of your healthcare benefits.
3. Cost Predictability
You may be concerned about cost predictability when switching from traditional insurance to self-funding. In a traditional plan, you pay a fixed monthly premium with little to no variable costs. In contrast, you may have as much as 85% variable spending with a group captive plan. When costs are variable, you can control them with data-driven cost saving solutions to further improve the savings of your self-funded health insurance plan.
With a 22% increase in premiums over the past five years, it might be time to consider the cost-saving potential of a self-funded plan. Although it allows for variability, Roundstone’s group captive model provides a more predictable cost structure than traditional self-funding.
You’ll pay fixed monthly premiums for claims and stop-loss insurance, similar to a traditional model, but get the benefit of 100% reimbursement on any unused premium funds at the end of the year. The Roundstone guarantee promises you’ll save money. If you don’t see savings after five years, we’ll make up the difference.
In fact, two-thirds of Roundstone customers save enough in their first four years to entirely pay for their fifth year of claims. And 100% save money, full stop.
And you don’t have to take our word for it. The Validation Institute verified employers in the Roundstone Captive save significantly compared to a fully insured plan.
We’ve returned over $72 million in premiums over the last 20 years, helping companies quit overpaying on insurance and keep more of their own money.
4. Access to Quality Care
Shifting to self-funding might raise concerns about potentially compromising your employees’ healthcare quality. For instance, you might worry about limited access to top medical providers or services or brand-name prescription medications.
However, at Roundstone, we emphasize that managing costs doesn’t mean sacrificing care quality. Our approach involves crafting customized plans and operating transparently, allowing your business to maintain or even improve healthcare quality.
For instance, you have the flexibility to strategically choose providers and services, effectively meeting your employees’ healthcare needs while spending less.
You can include strategies like:
- Instating a Direct Primary Care Program
- Using Centers of Excellence
- Building concierge services into your plan
- Implementing telehealth and behavioral health coverage
- Offering employee well-being programs
- Partnering with transparent pharmacy benefits managers (PBM) to lower prescription medication costs
5. The Transition Process
Feeling overwhelmed about switching to a self-funded plan is common, especially when considering the intricacies of plan design, setting up claim processes, and ensuring compliance with self-insurance laws. These tasks can appear complex and time-consuming.
Roundstone makes sure you are not alone during this transition. We provide thorough support and expertise at every stage, from analyzing your needs to implementing and managing your plan. Our team, including a customer service manager, advisor, and CSI Team, guides you through each step, ensuring the switch to self-funding is smooth and stress-free.
And our support doesn’t stop after you join. Our Cost Saving Investigators (CSI) team will continue to work with you to identify cost-saving opportunities you can take advantage of anytime — you’ll never need to wait until the end of the plan year to make changes.
6. Regulatory Compliance
Adherence to healthcare regulations such as the Health Insurance Portability and Accountability Act (HIPAA), the Employee Retirement Income Security Act (ERISA), and the Affordable Care Act (ACA) can be intimidating, especially for businesses without a dedicated legal team. The risk of non-compliance brings potential fees and penalties, adding to the complexity.
Roundstone can step in to ensure you meet all relevant healthcare regulations. Our expertise and support simplify complex healthcare laws, allowing you to confidently manage your plan. We connect you with a TPA, who will handle these regulatory issues, enabling you to enjoy the benefits of self-funding without the hassle.
Beat Self-Funding Challenges With a Group Captive Plan from Roundstone
Tired of the limitations and high costs of traditional health insurance? Roundstone’s group captive plan can help you successfully navigate the challenges of self-funding with wide-ranging support, cost predictability, and streamlined onboarding.
ROUNDSTONE is an innovative employee health benefits company. We help small and midsize organizations offer competitive benefits at a lower cost by self-funding health insurance through our group medical captive. The Roundstone Captive enables companies to self-insure safely by pooling hundreds of employers together to share risk and save money.
With easy onboarding and personalized support every step of the way, the captive offers control, flexibility, and transparency, and returns all savings back to employers where they belong. We believe in always aligning with the employers’ best interests and remain committed to our mission — quality, affordable healthcare and a better life for all.
Experience the freedom of customizing your health plan while gaining control over costs. Contact us today and start shaping more efficient and tailored health insurance for your business.
