There are myths that surround the provision of self funded health plans. A misperception of the role and capabilities of self funded health benefit schemes could be costing your clients money.
These observations are based on 18 years experience in relationship, benefits and account management and setting up some of the largest self funded schemes in the country with all types of benefit cover. With the support of an experienced administrator a self funded arrangement is simpler and easier to set up than many suppose. A trust, or another suitable funding vehicle such as the Simplyhealth Scheme Agreement, is always a viable alternative for employers providing private healthcare schemes with over 500 employees. This approach should be considered as an option with client groups of this size and above. The flexibility that underpins self funding can also make it suitable for smaller groups requiring specialised or bespoke benefits.
Myth 1 – Self funded schemes are difficult and expensive to set up.
A lot easier than intermediaries may lead customers to believe.There are several mechanisms that can be used. They are: a fully bespoke trust, a non-bespoke trust, and a scheme agreement, the latter being unique to Simplyhealth
Creating your own bespoke trust, set up specifically for the company, is the most involved and costly option, but advice from an experienced provider, such as Simplyhealth, can help manage your legal costs. We can also offer the facility of joining a Simplyhealth trust which offers set benefits and trustee’s services. This option provides the advantages of a trust without substantial legal costs to draft your own Deed and set-up time. Finally, the simplicity of establishing the scheme agreement means (providing employee contracts give health benefit entitlement) it is immediately available. Large companies have successfully used scheme agreements for over 20 years.
Scheme administrators charge an administration fee to manage schemes on a per capita basis. These compare favourably with the cost-plus administration fees charged for large insured private medical insurance groups.
Myth 2 – Self funded will not provide savings over a keenly priced comparable medical insurance scheme.
There are keenly priced insurance quotes to be had, but these rates are not always sustainable over time. The structure of a well managed self funded scheme can maintain clients cost savings year after year. Most obviously, a trust or a scheme agreement obviates the need to pay IPT, a saving currently of 5%, and offers P11D advantages. A well designed, professionally administered, self funded scheme is tax efficient and is capable of fully meeting the detail of any particular or unusual customer needs.
Myth 3 – Corporate insurance schemes are just as flexible as a self funded scheme.
It is true that benefits are bespoke for corporate clients but they are unlikely to have the same degree of benefit flexibility and choice as a self funded scheme. For example, companies may choose to include treatment for the cost of certain chronic conditions or choose very specific areas of benefit cover. Simplyhealth regularly run schemes that include benefit for medical conditions that are commonly excluded from equivalent cover in the insured market. We also run self funded schemes for groups such as company pensioners for whom insurance costs may have become prohibitive.
Myth 4 – An insured solution reflects companies’ values and culture as well as a self funded scheme.
Most importantly, the self funded scheme can become a real reflection of a company’s culture and values. Companies can choose their own benefits and levels of cover, they can choose and brand their own literature, they can decide which benefits they wish to highlight and measure the value of the scheme through the prism of their own objectives. Simplyhealth support each client with a suite of management information and a consultative approach to account management. The quality and commitment of account management plays an important role in ensuring the objectives of the scheme are met. The intermediary and Simplyhealth can work together to demonstrate real value for the client, analysing trends, and fine tuning benefits as the scheme develops.
What is a self funded health plan?
A cost effective alternative to a traditional private medical insurance model, providing cover for over a million people in the UK.
A company places funds into an approved funding mechanism to meet the cost of claims. It gives the employer flexibility to choose the benefit cover they want for their employees. An administration provider is retained to run the scheme. Simplyhealth is one of the largest providers of these services. We use our expertise to advise on the choice of benefits, estimate and manage the funds, negotiate costs of treatment, provide customer service from our UK offices and manage and pay claims. Simplyhealth takes great pride in being bothered to look after our customers. The schemes we administer regularly return a rating of satisfaction with claims service of over 95% (2009 survey).
Simon Cook, Head of Key Accounts at Simplyhealth