Self-Funded Health Insurance

Self-Funded Health Insurance

Greenhill Fireworks Company is a new company that displays fireworks for interested businesses. The company is located in California, under the ownership of Mrs. Latoya. The company currently has 35 employees, and Mrs. Latoya is considering self-funding the company’s health insurance.

The advantages of self-funding would include:

• Better financial control
• There is greater flexibility since plans can be customized
• Lower costs since there are no state-levied premium taxes

The disadvantages of self-funding are:

• Extraordinary claims lead to the risk of high losses
• Operational inefficiencies may lead to financial loss
• There is a risk of in-house fraud

I recommend that the owner of the company should go for a self-funded health insurance plan. Even though this would expose the company to the risk of losses, she will be able to save a lot of money and have better financial control. Going for a self-funded plan would also mean greater flexibility since she will be able to customize the plan based on the employee population and her goals.

The health insurance plan that should be offered to employees is HMO. In HMO plans, the level of coordination between providers is usually very high. A primary care physician is selected to coordinate the care that the employees may require from other health care providers. This makes care for employees to be simplified. HMO plans also have lower overall costs since employees have low deductibles (Qingyue et al., 2011). This may help the owner of the company to save money.

Reference

Qingyue, M., Liying, J., & Beibei, Y. (2011). Cost-sharing mechanisms in health insurance schemes : A systematic review. The Alliance for Health Policy and Systems Research, WHO, 1–76.

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Self-Funded Health Insurance

Self-Funded Health Insurance

Assignment: Pretend the owner of your company is considering self-funding the company’s health insurance. You need to advise her, but she doesn’t like to read so keep this SHORT, to the point, well edited:

• Make up a company (be creative, how many employees are there and where are you located)
• Tell your boss three advantages to self funding and three disadvantages; make a recommendation
  

  Self-Funded Health Insurance

• Whether she decides to self fund or not, which type of health insurance plan or plans do you think should be offered to employees AND WHY?
• Bullets are ok, but be sure you make sense!