Helping CEOs Sort Out Fully Insured Health Insurance, Partially Self-Insured Health Insurance, and Self-Insured or Self-Funded Health Insurance Plan Options

Fully-insured group health insurance plans in Texas are subject to the laws of Texas, as well as federal ERISA laws.  As such, fully-insured Texas group medical insurance plans are required to have benefits that have been mandated by the Texas legislature in addition to following federal rules.  This includes benefits that the employer and employees may never need or use but must pay for so that other non-employee Texans can be assisted by the mandated benefit.

Fully insured Texas group health insurance plans group, or "pool" the employees of one company with the employees of many other employers in Texas.  This is a basic principle of insurance that allows Texas group health insurance companies to spread the risk of major medical claims across a statistically greater number of individuals and companies. 

This "pooling" allows businesses, especially small businesses in Texas, to eliminate the catastrophic financial risk of a major medical insurance claim by an employee.

Because of this spreading of risk, a health insurance premiums for a company with a fully insured group health plan will be affected by not only the health and age factors of their own employees, but also by those of other employees and employers in the Texas group insurance carriers pool of members.

Employers with fully-insured group medical insurance plan can partially influence their rates by encouraging employees and dependents to have healthy lifestyles, such as exercising, maintaining a healthy weight, and avoid tobacco and alcohol use.  But there is very little at all that a company with a fully-insured health insurance plan can do to reduce the impact of health insurance claims from other employees and companies in the same group health insurance carriers pool of members.

This is why some Texas businesses may decide to self-insure, or self-fund medical claims of their employees.  They can more readily determine which benefits that they want to include in their group health insurance plan, with fewer government mandates. 

The company that self funds their insurance often contract with a third party administrator or use a Texas health insurance carrier for administrative services only to reimburse health care providers for their employee's medical expenses.  

But the overall cost of insuring employees with a self-funded group health insurance plan in Texas is often (but not necessarily) less expensive than the cost of insuring employees with a fully insured group health plan.

Companies with self-funded health insurance plans in Dallas are more in control of their own health costs, as their rates will not be directly impacted by the "pooling" effect of other companies and employees in the area.

Self funded health insurance plans in Texas statistically have more risk of major catastrophic health insurance claims, which makes them more appropriate for larger companies with several hundred employees.  But there are examples of "risk-taking" companies with fifty employees that offer self-funded group medical insurance plans for their employees.

Companies with Texas self-funded group health insurance plans can reduce their risk of major medical insurance claims by purchasing reinsurance from a reinsurance carrier in order to reduce their risk of overall medical insurance claims in any one year. 

For example, a Plano Texas company with 200 employees could self-insure, but purchase reinsurance that protects the company from the risk of any additional medical expenses after the company paid, say, $250,000 in medical claims in any one year.  The cost of that reinsurance policy and the total costs associated with administering the self-funded plan would likely (but not necessarily) be less than the cost of a fully-insured health insurance plan in Plano, Texas.

There is actually a new opportunity for CEOs to consider that could possibility benefit Dallas area companies with either self-funded or fully insured health plans.  Within the last two years, group health insurance carriers in Texas have introduced a tremendous number of fully insured group health plans with high deductibles and without Rx or doctor visit copay benefits.  Many of these plans have been priced very low on a per employee basis by the group medical insurance companies in Texas.

At Group Benefits Advisors, we have shown client companies how they can reduce the cost of health insurance and lower their risk from a self funded group health plans by purchasing one of these low cost, fully insured high deductible group health plans with deductibles of $5,000 to $10,000 per employee. 

By implementing a no cost health reimbursement arrangement (HRA) to reimburse employees employees after they meet the same deductible as they had with their self-funded plan, then "bolting on" to the employee benefits plans such items as a Rx card benefit from lower cost third party resources, the employee has the same benefits as they had before.

But because of the way that some of the Texas high deductible group health insurance plans have been priced by insurance companies, it is now possible that a company could spend less money to cover their employees with one of these fully insured plans and with much less risk to the business than if they had a Texas self-insured plan or partially self-funded plan in Texas with reinsurance.

To determine which strategy works best for your Texas company and for your employees, and for a no-obligation employee benefits consultation, contact Mike Chapman at Group Benefits Advisors, (214) 764-6315 or (888) 398-6246.