Six Reasons Why the ACA Makes Self-Funding Even More Appealing

Many provisions of the Affordable Care Act (ACA) apply to both traditional healthcare plans and self-funded plans. For example, the ban on pre-existing condition denials applies to both, as does the ban on annual caps. However, with a self-funded plan, employers can meet or exceed ACA requirements while protecting their financial interests and offering an exceptional healthcare benefits plan to employees. Here’s why:

1. Self-funded plans are not subject to the community rating requirements that the ACA applies to fully-insured plans, which is a significant pricing advantage. Smaller companies should look seriously at self-funding for this reason.

2. Self-funded plans sidestep the health insurance tax mandated by the ACA to traditional health insurers. This means an automatic 2 - 4% savings.

3. Self-funded plans are not subject to the Essential Health Benefit (EHB) requirements of the ACA, which stipulate minimum coverage for healthcare plans sold by insurers to small firms with 50 to 100 full-time employees. Such minimum coverage includes maternity care, mental health and preventative services.

4. Self-funded plans are not subject to medical loss ratio requirements, which apply to policies issued by traditional healthcare insurers. Employers gain greater flexibility in how their plans spend their health benefit dollars.

5. Self-funded plans avoid the state taxes on healthcare premiums paid to traditional health insurers.

6. Self-funded plans don’t have to offer a package of state mandated benefits and can be written to the company’s specifications instead. This means employers can design plans that help them meet their company goals.

 
Under the ACA, self-funded plans are more cost effective and offer greater flexibility.  Companies with favorable demographics can save significantly while offering their people a better benefits experience.