The percentage of U.S. workers covered by health plans that are at least partially self-funded by their employers has been rising gradually for many years, reaching 61% in 2014, compared with 44% back in 1999, according to the Kaiser Family Foundation.
Based on anecdotal evidence and current events and trends, the pace of that growth may pick up in the near future, some corporate benefits observers say. But there’s a caveat: Because the vast majority of large companies are already self-funded, new growth has to come further down the size spectrum.
“There are advantages for employers in self-funding, so we see the [growth] trend continuing, but largely among midsize and smaller employers, in the range of 100 to 1,000 covered lives,” says Brad Nieland, vice president of stop-loss at Sun Life Financial.
Switching from a fully insured health plan to a self-insured one reduces an employer’s health-care costs because health-insurance pricing builds in a risk premium and the insurer’s profit margin. Benefits consultants say that the savings, absent any other changes, is typically 5% to 8% for large companies, and in many cases even more for others. In return for those savings, of course, self-funded employers assume more financial risk than fully insured ones do. ...
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