Starting in 2014 under the Patient Protection and Affordable Care Act, companies with 50 or more employees either must offer health care coverage or pay a per-employee fee to the government. While smaller companies will be able to purchase health care benefits via state insurance exchanges created in response to such legislation, health care benefits experts expect many employers with 100 or more employees will opt to self-fund rather than buy commercial coverage.
Although self-funded benefits will be subject to many of the same coverage requirements imposed on insured plans, such as providing coverage for what the Department of Health and Human Services deems are “essential benefits,” the cost of self-funded benefit plans will continue to remain lower than that of insured plans because self-funded plans are not subject to state benefit mandates or premium taxes that add to plan costs, experts say.
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Because self-insured plans are governed by the federal Employee Retirement Income Security Act, self-funded employers also will continue to have the flexibility to make value-based plan design changes that deter employees from using expensive health care providers or nonessential services, or to encourage healthy behaviors, experts say. By contrast, insured programs will continue to be standardized to meet state insurance regulations, which do not permit such modifications, they say.
“Moving into 2014, there's one more reason to move to self-funding,” said Mark Whiting, a principal with consultant Mercer L.L.C. in Kansas City, Mo. “PPACA may be enough to push a client that's been teetering on the edge to move to self-funding.”
http://www.businessinsurance.com/article/20120219/NEWS05/302199999?tags=%7C74%7C278%7C305%7C339%7C342
Hat tip: Business Insurance
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