SELF-FUNDED VS. FULLY INSURED
There are many reasons a group considers being self-funding over fully-insured. Several major taxes and fees are avoided by self-funded groups, namely the Health Industry Insurance Tax (HIIT) and the Premium Tax (levied by each state).
The Affordable Care Act is partially funded by insurance carriers as an industry. The amount to be paid annually by carriers in 2014 was set at $8 billion, increasing to $14.3 billion by 2018 with regular increases beyond that time. Insurance carriers ultimately pass this tax on to buyers and employers, increasing the cost of insurance by 2.5%-4%.
Self-funded employers avoid this fee altogether. Self-funded employers are also able to reduce state premium taxes. When a group is fully insured, they are responsible to pay taxes to their domiciled state based on the total insurance premium. Self-funded groups are able to vastly reduce this tax liability by as much as 80%-90% by self-funding, since state taxes are only paid on the stop-loss insurance premium.
Use the calculators below to see what your group could be saving in HIIT and state taxes over the next three years:
[CP_CALCULATED_FIELDS id=”6″]
We would love an opportunity to work with you on your next renewal. To see a sample of what we do, click the “Example Report” button below. To request a full report on your group, click the “Request Full Report” button below. We’ll receive an email with the basic information we need to get started, we’ll review the data and create a report, and then we will email the analysis back to you.
This report will help you and your client determine if transitioning from being fully-insured to self-funded is a good option at the time or if it makes more sense to wait.
STOP-LOSS COMMISSION VS. BROKER FEE
Brokers offer varied levels of service to their clients. The method of compensation comes in many forms as well.
Some brokers are fee-based, meaning they charge a specific fee for their services. Some brokers charge a commission, or a percentage of premium. Other brokers may structure compensation with a combination of fees and commission. If a broker has a specific dollar amount in mind for their expected compensation, it is almost always most beneficial to the group to charge a broker fee instead of commission. This is because there is a compounding effect on premium as commission rates increase above 0%. Other factors built into the stop loss premium must increase to accommodate commission, whereas a broker fee built into the administration costs is not vulnerable to this compounding effect.
To see how this works, enter your group’s annual premium in the calculator below:
[CP_CALCULATED_FIELDS id=”7″]
We would love an opportunity to work with you on your next renewal. To see a sample of what we do, click the “Example Report” button below. To request a full report on your group, click the “Request Full Report” button below. We’ll receive an email with the basic information we need to get started, we’ll review the data and create a report, and then we will email the analysis back to you.
This report will detail the impact of broker commission on your group and suggest alternatives to keep the cost down for your group.