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While it is still too early to tell exactly how competitive the exchanges will be, tax credits
coupled with group rates in the exchanges may help your business to provide cost-effective
workplace benefts. If you are considering shifting employees to the public exchange, you
may save on health care costs that could be allocated to supplemental benefts or employee
salaries to provide increased value to your employees.
Self-funded model:
Self-funded health care insurance plans offer an alternative to traditional health care models. In
a self-funding model, the company is responsible for covering all claims in the health care plan,
but because these plans are excluded from some requirements of the ACA, employers can
save costs related to premium taxes and state insurance regulations.
Self-funded plans tend to shift additional costs to employees, especially when an employer
has a workforce with signifcant health care needs. Still, these plans are becoming increasingly
popular with small businesses and can help to reduce and manage employee health care
costs, while still delivering the health coverage that their workforce demands.
Defned contribution model:
In a defned contribution model, employers give their employees a fxed amount of money
and a list of health insurance options for employees to pick and choose. This helps employers
to keep costs predictable, while also offering employees the option to “buy-up” to more
robust insurance coverage. Since these programs require employees to make more informed
decisions about health care, it will be increasingly important they understand how an employer
contribution works, and how to choose supplemental options to augment out-of-pocket costs.