Saving Over $1 Million Annually with Self-Funded Plans

Situation:
In 2011, a popular specialty apparel retailer with fully insured benefit plans decided to explore self-insurance options for its employees nationwide. Initially, there had been concerns about the cost impact, as the self insured plans would be based on the three relatively rich plans in effect in California (an HMO, a lower cost PPO, and a higher cost PPO).

To weigh the virtues of self insurance against full insurance, the company required a comprehensive risk management analysis of their benefit program, which our Employee Benefits Services team performed

Solution:
Our Employee Benefits Services team conducted several financial studies to identify what the company’s experience potentially would have been had its plans remained fully insured. Our analysis revealed millions of dollars had been saved since 2012 by converting to self insurance.

Here are the findings:

2012 SAVINGS: $ 2,266,388
2013 SAVINGS: $ 1,548,356
2014 SAVINGS: $ 1,537,357

TOTAL SAVINGS: $ 5,352,101

Going forward, we also implemented the following changes:

Adjustments to plan cost sharing
Addition of a consumer directed health plan (CDHP)
Restructuring of employee contributions
These additional solutions helped the company see significant cost savings year after year by helping to curb increases in claim costs and improve employee plan utilization in the higher cost plans.

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