Business Insurance Spotlights Self-Insurance

“Self-Insurance: Taking Control of Your Benefits Program.” So reads the cover of Business Insurance for the week of February 20, 2012. In a number of articles over 22 pages, BI addresses the predicted growth of self-insurance in the light of the Patient Protection and Affordable Care Act.

Two majors “whys” in the articles have to do with agent compensation and the potential savings of avoiding state mandates and premium taxes.  Soon carriers will be limited to overhead expenses no greater than 15% of their earned premium.  When underwriting, marketing, accounting and all other overhead items are taken into account, there is little left to pay the agent who developed the business for the carrier in the first place.  Logically, many agents will be looking to direct clients into self-funding situations where commissions will not be so drastically reduced.

The second “why” notes that self-funded plans are regulated by ERISA and not the individual states. This means that self-funded employers can avoid many of the coverage mandates  required by fully-insured plans.  For instance, one state has 40 different coverage features mandated in policies approved in that state.  Obviously being able to pare down this list could be a big help.  Additionally, premium taxes assessed by the states on insurance premiums are less in self-funded plans since the premium for high deductible policies (the stop-loss policies that make self-funded plans financially secure) is significantly less and so, therefore, is the tax burden.

Buy Business Insurance.  There are a number of other articles that foresee the self-insurance market after the full implementation of PPACA.  Or call us. We will be happy to show you how self-funding may apply to your situation.

 

Call us, We can do better.

William Faris, JD
Chief Executive Officer
502-495-5040
william.faris@omca.biz
www.omca.biz

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