Insurance: Interest rises among employers for self-insurance

Employers will increasingly resort to self-funded plans for group health insurance as a result of the Affordable Care Act, according to a new survey of insurance executives by one of the world's largest re-insurers.

In the survey by Munich Health North America, a subsidiary of Munich Re, 82 percent of employers have experienced a "growing level of interest" in self-funded health plans over the last 12 months. Nearly one-third also said interest has increased "significantly,"

It's not the first sign of such interest and it's evident in the North Bay, according to insurance experts.

[caption id="attachment_72294" align="alignleft" width="162"] John Nacol[/caption]

"I am sure many employers will look toward self-insurance as a way to provide medical insurance for their employees," said John Nacol, chief executive officer of Redwood Health Services in Santa Rosa, which specializes in benefit plans that involve partial self-funding.  "Self-insurance provides the flexibility to design a medical plan that fits their employees' needs."

According to the survey, health insurers anticipate an increase in self-funded plans or "Administrative Services Only" portfolios, with nearly 70 percent of respondents saying they plan on growing such portfolios over the next 12 months.

While self-funded plans can result in more flexibility -- and less stringent requirements -- there is an inherent level of risk that employers need to consider.

"Self-insurance comes with risks that many employers have not engaged before," Mr. Nacol said. "Self-insurance provides 're-insurance,' which allows employers to cap their risk."

The survey's findings echo what brokers in the North Bay have said over the past 12 months regarding such plans, particularly with health care reform taking full effect in less than a year, and particularly with smaller employers. For large companies with several hundred employees, the concept is fairly typical, but for those with smaller workforces, there is less room to spread the risk.

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