The Situation: The average per-employee cost of employer-sponsored health insurance increased by 6.3% last year. The increase is attributed to employees returning to their healthcare providers for regular care as the COVID pandemic restrictions eased. However, for those looking for ways to save, employer self-funded health benefit insurance is an option. In 2021, data revealed that 64% of employed, insured workers are covered by a self-insured program.
The Potential Benefits: Self-insured programs are governed by the Federal Employee Retirement Income Security Act of 1974 (ERISA), which exempts self-insured plans of private employers from most state insurance laws. Such plans are exempt from state taxes, for example. Self-insured programs can also decrease employer “premium” costs as the profit margin for the health insurer is not included as part of the costs. Self-insured programs also can provide the employer with more transparency and control.
The Potential Risks: Self-insured programs may be rewarding, but they can also come with risks, including the ability to spread risk, compliance with federal law, and the ability to negotiate with the relevant players (TPAs, health insurers, hospitals, and/or physician networks).
The Solution: A few strategies can help:
- Stop-loss coverage: Incorporate stop-loss coverage into the employer’s self-funded health benefit program to protect the company from certain, rare and/or unexpected losses, such as per employee cap and aggregate caps.
- Health insurance partner: Partner with an experienced health insurance individual who understands the health insurance benefit players and issues.
- Legal counsel: Use legal counsel to evaluate contractual agreements with a TPA and/or health insurer, provide advice on federal laws, and coordinate with your health insurance partner.
ABOUT MAGGIE DICOSTANZO
firstname.lastname@example.org | 717.980.3142
Maggie DiCostanzo is a principal attorney in Offit Kurman’s Healthcare practice group. For nearly 20 years she has focused her legal practice by representing physicians, hospitals, post-acute care facilities, and other healthcare professionals, delivering health law advice and counseling as well as representation in regulatory, general liability, and professional liability matters. She is also a registered patent attorney with the U.S. Patent & Trademark Office, and drafts licensing agreements and other intellectual property-related documents. Ms. DiCostanzo also assists lawyers in Offit Kurman’s other practice groups, including Business Law and Transactions, to address discreet healthcare issues.
ABOUT OFFIT KURMAN
Offit Kurman, one of the fastest-growing, full-service law firms in the United States, serves dynamic businesses, individuals and families. With 17 offices and nearly 250 lawyers who counsel clients across more than 30 areas of practice, Offit Kurman helps maximize and protect business value and personal wealth by providing innovative and entrepreneurial counsel that focuses on clients’ business objectives, interests and goals. The firm is distinguished by the quality, breadth and global reach of its legal services and a unique operational structure that encourages a culture of collaboration. For more information, visit www.offitkurman.com.
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