WASHINGTON (Nov. 25, 2013) — "Self-Insurance and Health Benefits: An Affordable Option for Small Business?" was the topic of a Nov. 14 hearing before the House Small Business Committee's Subcommittee on Health and Technology.
Under the Affordable Care Act (ACA), self-insurance is becoming a more attractive option, said Rep. Chris Collins, R-N.Y., chairman of the subcommittee.
"With the onslaught of regulations, cost increases and uncertainty surrounding fully insured plans,…more small businesses may choose to explore self-insurance as a manner of providing competitive benefits packages for their employees," Rep. Collins said in his opening statement at the hearing.
There are two different self-insurance options available to small business, according to Michael W. Ferguson, president and CEO of the Self-Insurance Institute of America.
"The first option is to purchase a traditional group health insurance policy from a licensed health insurance carrier," Mr. Ferguson said. "The other option is to retain the financial and legal risk through the use of a self-insured group health plan.
"Self-insured employers typically outsource claims administration functions and retain stop-loss insurance as a financial backstop for catastrophic claims," he said.
But self-insurance isn't necessarily a panacea for small business, according to Robin Frick, who testified on behalf of the National Association of Health Underwriters.
"It is important to note that self-funding a health plan does not allow employers to escape the impact of health reform," Ms. Frick said. "Most of (the ACA's) market protections apply to all employer group health plans, regardless of how they are financed."
The Automotive Service Association has posted links to the full testimony at the subcommittee hearing on its legislative website.