Listening to a secret Whenbrokers consistently present self-funding as the best possibleoption for the client, they'll find many small-business owners arelistening with open ears. (Image: Shutterstock)

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With premiums constantly on the rise for employers offeringfully insured health plans, brokers are searching for ways toconvince their small and mid-size clients that switching toself funding can cut costs on their top lineitems.

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Switching to one of these plans means that the employer assumesmore risk, with stop-loss insurance providing financialprotection against catastrophic claims. They can also pay medicalclaims as incurred as they would other corporate expenses, or candeposit expected or maximum costs into an account each month.

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Related: Self-funding: When is it right for yourclients?

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There are many ways brokers are going about convincing theirclients to make the leap, from educating them on the cost of themedical loss ratio, highlighting the financialpressure health care is placing on their business, or just makingthem feel as uncomfortable as possible by explaining their fullyinsured payment methods.

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Bob Gearhart Jr., partner at benefits brokerageDCW Group in Boardman, Ohio, says explaining the MLR and how itguarantees fully insured premiums will rise is a great startingpoint when initiating the conversation.

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“Benefits is one of the few areas the CFO has not optimized andthey are feeling pressure from the CEO to drive earnings to thebottom line,” Gearhart says. “This organizational pressure coupledwith health care in the headlines is slowly changing the buyerwithin the organization.

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Gearhart adds that leading HR professionals recognize this andproactively engage the C-suite in the buying decision.

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Robson Baker, employee benefits and HR adviser for ClarusBenefits Group in Houston, Texas, says getting the C-suite and HRthrough the awareness phase of the conversation is the hardestpart.

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“The broker needs to educate and bring the pain points to theforefront of their minds,” Baker says. “Then it moves toconsideration — which can be led by a strategic CFO andcompassionate HR department.”

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Framing health care cost as a financial decision allows thebroker to approach the CFO first and then bring the self fundingplan down to HR and out to the other employees.

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“Showing ways to improve the employee experience and having aplan to implement and educate in the coming years will get the earof HR,” Baker says. “But remember that the benefits industry haspromised savings and great service for years, so what will be thisadviser's unique result?”

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Derek Winn, health care and benefits consultant at The BusinessBenefits Group in Fairfax, Virginia, says once the C-suite and HRare exposed to the high cost of their fully insured plan and themeans to drive down that cost through self funding, the employerwill feel empowered to make a change.

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“They will also quickly realize the impact to not only for thecompany, but also their employees,” Winn says. “As the desire forcontrol, compassion and sustainability overwhelm them, they can usethat momentum to educate, empower and execute.”

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For brokers like David Contorno, founder of E Powered Benefits,the decision to switch to self-funding should be an obvious one. Hesays if the CFO continues to push the health care cost issue downto the HR level, the broker needs to become more aggressive askinghow the decision to have HR handle to cost problem has reducedtheir line-item budget costs.

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“I love HR, we need their support, but their financial educationand experience does not lend itself to decision making on a topfive spend on the P&L,” Contorno says.

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When brokers consistently present self-funding is the bestpossible option for the client, they'll find many small-businessowners are listening with open ears. Jeff Chestnut, CEO at CoilTubing Technology, was one such owner eager to learn more about hisoptions.

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“What is driving me is the cost,” Chestnut says. “The storyneeds to address the need to not only control, but improvequality.”

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If the cost is high enough, small groups are more open toadopting new ideas, says Chris Corkran, national sales director atNational Insurance Partners. “The brokers that I have seen have themost success have brought employers into the mindset of changecompletely and have immersed themselves in providing solutions tothe group,” he says. “Sell on strategy, not rates.”

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