Self-funded plans: Examining the pros, cons, and misconceptions 

It is easy to understand why health insurance brokers and benefits advisors are desperate to reduce employer-sponsored health care costs for their clients. They have shouldered the unenviable task of sharing significant cost increases with their clients year after year and, as a result, have experienced anger and frustration.

According to the 2022 Kaiser Family Foundation Employer Health Benefits Survey, the average premium for single coverage in 2022 was $7,911 per year and the average premium for family coverage was $22,463 per year. Over the past decade, these costs have increased from $5,615 for single coverage and $15,745 for family coverage. That’s lots of bad news for advisors to communicate to clients.

In response to constant increases in costs and increasing despair, carriers, managing general agencies, third-party administrators and consultants are encouraging employers of all sizes to self-insure their health plan costs. For the right employer, self-insurance provides an opportunity to reduce costs. While self-insuring health care costs is not unwise for all employers, there are some factually untrue declarations made by many who are promoting self-insurance and putting employers, and perhaps their employees, at serious risk.