Funding Strategies

The requirements of Health Care Reform and the Affordable Care Act (ACA) have spawned many new and innovative approaches to the design, delivery and funding of employee benefits.

Work with your CU Benefits Advisor to explore your options and help you decide on the funding strategy that’s right for your business.

Fully Insured Health Plans

A traditional fully insured health plan strategy may be right for your company. Your CU Benefits Advisor will help you understand how the various fully insured plan options — Preferred Provider Option Plans (PPO), Point of Service Plans (POS), and Health Maintenance Organizations (HMO) — can impact your employees out-of-pocket and your total plan costs. We’ll leverage our carrier relationships and local expertise to broker the best deal for your company.

Self-Funded (Self-Insured) Health Plans

A self-funding strategy offers you a number of cost advantages. You’ll be able to:

  • Improve cash flow by paying claims only when incurred
  • Avoid excessive insurance company risk charges
  • Avoid insurance company reserves
  • Avoid most taxes on premiums

A self-funded plan also gives you greater flexibility. You’ll have full access to data that enables you to gain insights into plan utilization and performance that you can’t get with a fully insured plan. You’ll see where to make adjustments for continuous plan improvement year over year. And because self-funded plans are exempt from state insurance mandates, you’ll be able to tailor your employee benefits more precisely to meet employee needs while still meeting business objectives.

Your CU Benefits advisor will sit down with you to analyze your existing plan and claims history and help determine if your employees and your business can benefit from self-funding.

Partially Self-Funded (Partially Self-Insured) Health Plans

A partially self-funded health insurance plan looks, smells, and tastes like a traditional health insurance plan. Structured properly, there won’t be any risk to you.

Here’s how it works:

  • You budget for premiums just as you do now. A portion of those premiums goes into a claims fund that will be used to pay the first portion of health claims that arise in your group. As in a traditional self-funded plan, you are actually paying your employees’ claims. But, unlike a true self-funded plan…
  • You have an “aggregate deductible” or stop-loss for large claims. Once you’ve reached that number, an insurance company takes over the payment of claims.
  • There is no risk to you. Your premiums are calculated to fund the claims up to the aggregate deductible amount.
  • You only pay for what you use. If you don’t use up the money in your claims fund, you get to keep it.  If you do use up the money budgeted for claims, you end up paying what would be equivalent to a fully insured premium.

Consumer-Driven Health Plans

A Consumer-Driven Health Plan (CDHP) aims to bring your employees to a better understanding of the costs of their health care and to take a greater share of the responsibility for the management of those costs.

Because CDHPs feature a high deductible, they are often supported by tax-exempt Health Savings Accounts (HSAs), Health Reimbursement Accounts (HRAs), and/or a Health Flexible Spending Accounts (FSAs). Your employees use their tax-exempt account savings to help cover deductibles, co-insurance, qualified health care expenses or invest those savings for future medical costs.

Your CU Benefits advisor can help you explore the consumer-driven approach to funding your health care benefits. Together, we can design a plan that fits your financial objectives and also gives your employees the support they need to understand their options, track their expenses, and improve their health.

Cafeteria Plans

A Cafeteria Plan implements a benefits funding strategy that can mean tax savings for both you and your employees. Under Section 125 of the IRS code, a Cafeteria Plan offers employees the option of using pre-tax payroll dollars to pay premiums for a range of benefits including health insurance, group-term life insurance, and voluntary or supplemental insurance. Like a CDHP, a Cafeteria Plan will typically include tax-exempt savings accounts from which employees pay premiums.

Contact your CU Benefits advisor to learn more about the advantages of the Cafeteria Plan or any of your funding strategy options. Together we’ll design the plan that works for you.