Self-insured health insurance is a kind of health insurance where an employer covers the financial risk of providing healthcare to their employees. The employer funds and manages the payment of medical services, coverage requirements, and claims of health coverage. Self-insured health insurance is employer-sponsored coverage in which the employer pays at least 60% of the costs.
There is no one-size-fits-all pricing for self-insured health insurance in Texas because there are various factors that can affect the policy’s premium cost, including:
However, an employee’s health, medical history, or gender are not considered in determining premium cost. In 2021, employers covered an average of $6,400 or 83% of premiums for individuals and $16,250 or 73% of premiums for families. The average premium cost paid by employees under self-insured plans was $1,320 annually ($110/month) for individuals and $6,000 annually ($500/month) for families. Generally, the monthly premiums paid by an employee should not be more than 9.61% of their household income in 2022.
The costs involved in servicing a self-insured health plan in Texas include monthly premiums, deductibles, co-pays, coinsurance, and out-of-pocket maximum. Also, employees can try to determine the average cost of their plan for the year with the help of a Texas-licensed insurance agent. Employers can do this by consulting with their third-party administrator (TPA).
There are mainly five types of payments you make when enrolled in a self-insured health plan in Texas. These are:
Premium: The premium is the periodic payment made to keep your health plan active. Like most health coverage, self-insured health premiums are usually paid monthly. Premiums may also be paid quarterly or annually. Certain factors determine your premium cost including:
Deductibles: Deductibles are healthcare costs that you must pay before your self-insured insurance policy starts covering you and paying claims. Usually, if you have high deductibles, it is expected that your premiums will be low. Also, having a plan with low deductibles means that your premiums will be high.
Co-payments: In insurance, your copay is the partial amount you agree to pay for the service, while your plan pays the remaining amount. For example, if you are to undergo a medical procedure that will cost $3,000, your copay may be $500, and your plan will pay the remaining $2,500.
Coinsurance: This is a percentage of your medical bill that you have agreed to pay after paying your deductible. Self-insured coinsurance usually ranges from 20% to 30% of your healthcare bills. For example, if your coinsurance after deductibles is 30% and you receive medical benefits of $1,000 in costs, you will pay $300 while your plan will cover the remaining $700.
Out-of-pocket maximum: This is the limit your plan places on the amount spent on in-network health benefits. It includes deductibles, copays, and coinsurance costs and excludes premiums, out-of-network costs, and non-covered services. The maximum out-of-pocket costs in 2022 are $8,700 for an individual plan and $17,400 for a family plan annually. Also, the maximum out-of-pocket cost for individual HDHP is $7,050 and $14,100 for family HDHPs.
Generally, when enrolling for a self-insured health plan, you should take note of the monthly premiums, deductibles, copays, coinsurance, and annual out-of-pocket maximums.
Depending on how much your employer contributes, you can expect to pay between $100 to $200 per month for a medical individual health insurance plan. For family plans, it is between $400 to $600.
Typically, the cost of self-insured health insurance premium for individual coverage is between $100 and $200 per month. It is between $400 and $600 monthly for a family coverage. The cost usually depends on the percentage contributed by an employer.
The type of network an individual chooses determines the cost of their self-insured health insurance plan. The plan may be a PPO, HMO, HDHP, or POS plan. Access to health providers is managed differently depending on the plan. For example, HMOs are restrictive in terms of the doctors you can see and the requirements for seeing them. Consequently, insurers save on the cost of an insured’s healthcare, resulting in lower premiums. Below is the estimated breakdown of the monthly cost of the Texas self-insured plans for 2021:
|Type of plan||Employer monthly contribution ($)||Employee monthly contribution ($)||Total premium cost ($)|
The average monthly premium (paid by the employee) for PPO individual plans is $116. It costs around $536 for an employee to pay for a monthly family plan. Annually, this is around $1,389 and $6,428 for individual and family plans, respectively.
Self-insured health insurance premium for individual plans of small and large firms in 2021 was $7,813 and $7,709, respectively. The monthly premium paid by employees was $156 and $150 for small and large firms respectively. It was $21,804 (small firm) and $22,389 (large firm) for family coverage. The monthly premiums contributed by employees were $636 and $645 for small and large firms, respectively.
Self-insured health insurance monthly premium for an individual plan is usually around $645, with an employer contributing up to $537 and the employee paying $108. For a family plan, it is about $1,852, with the employer contributing $1,354 and the employee contributing $497.
In 2021, the average cost of a self-insured individual health plan for small company employees in Texas was $7,813. Employers contributed an average of 76%, which is $5,938, and employees contributed the remaining 24% ($1,875). For family health plans, it costs around $21,804 annually; employers contributed 65% ($14,173) and employees contributed 35% ($7,631). Going by the annual figures, employees’ monthly premium was $156 for individual plans and $636 for family plans.
Only High-Deductible Health Plans (HDHP) of self-insured health policies have high deductibles. The minimum annual deductible for an individual HDHP is $1,400 and $2,800 for a family HDHP. In 2021, the average deductible for employees in non-HDHPs was $2,370 for small companies and $1,390 for large companies.
Yes. The lower the premium, the higher the deductible for a self-insured health insurance plan. And the lower the deductible plan, the higher the premium cost. You can save money on your monthly premium if you pay for additional care in advance. Additionally, you can predict how much you will spend when you pay a higher premium with a lower deductible.
Most times, self-insured coverage is expensive because the beneficiary uses the services of out-of-network professionals. It is hard to find expensive employment-sponsored coverage, like self-insured plans, because employers contribute substantially to reduce the costs borne by their employees. For example, premiums are not supposed to be more than 9.61% of an employee’s household income, while employers cover at least 60% of the costs. However, these contributions will be limited if employees receive most of their benefits from out-of-network health professionals. The number of an employee’s dependents and the overall cost of the company’s health coverage from the previous year may also affect the cost for the following year.
There are many reasons why a self-insured health plan in Texas may be high for an employee. Some of the reasons are:
When setting the cost of self-insured health plans, an employer usually considers the following:
No. Like other health insurance policies in Texas, self-insured health plan premiums do not go up after a claim. Generally, the amount of claims you make does not affect your premium cost in health insurance.
Your claim will not affect the cost of your self-insured plan in Texas. Hence, if you are enrolled under a self-insured plan with a $100 premium per month, the premium will not change even after filing a claim. Premiums are only reviewed at the end of the year.
The cheapest self-insured health insurance plans in Texas in 2021 were HPDP and POS plans. In that year, an average individual HPDP cost $7,016 ($585 monthly); employers covered an average of $5,774 ($481 monthly) and employees covered $1,242 ($104 monthly). For family HPDP, the annual premium was about $20,802 ($1,734 monthly), with employers covering $15,674 ($1,306 monthly) and employees covering $5,129 ($427 monthly).
In 2021, an average individual POS plan cost $7,769 ($647 monthly); employers covered about $6,587 ($549 monthly) and employees covered approximately $1,183 ($99 monthly). A POS family plan costs about $20,724 ($1,727 monthly), with employers covering $13,213 ($1,101 monthly) and $7,512 ($626 monthly).
The potential increase or decrease in the cost of self-insured plans usually depends on the collective cost of the coverage from the previous year. The employer uses the health data included in the insurance claims made the previous year to create the health budget for the following year. Sometimes, the general increase or decrease of the cost of healthcare in the country may influence the cost of self-insured health plans. You can reach out to a Texas-licensed insurance agent to find out more about the cost of self-insured health insurance plans.
How much self-insured health insurance an employee needs in Texas depends on their specific health needs. For example, an employee with scheduled surgeries a number of times during the year may want to choose a low deductible plan.
Employers are to provide employees with the health coverage they need. In the process, an employer has the discretion to determine the coverage and structure of the benefits. However, employers must ensure that plan decisions are nondiscriminatory. They must be made on bonafide grounds, such as geographic location, length of service, or date of hire.
Like most health insurance plans, the amount of self-insured coverage an employee needs depends on their health status and financial capacity. Two questions need to be answered: what are the employee’s medical needs? And can the employee cover them with their present financial state?
Another factor that may determine how much coverage an employee needs is the employer’s percentage contribution. If an employer decides to cover a substantial percentage of the premium, an employee pays less and may not have to worry about the high cost of coverage.
The amount of coverage an employer should provide an employee is discretionary. The employer is to decide coverage and health benefits based on legitimate and non-discriminatory grounds. Generally, it is important that health coverage is provided for employees because it is key to employee job satisfaction. It helps employees to be productive. Also, depending on the circumstances, self-insured health plans can help employers save more.
Overall, employers and employees should speak with registered insurance agents in Texas to learn more about health coverage needs.
Self-insured health insurance is offered by employers or associations to the members.
Unlike most health insurance plans, there is no prescribed or guaranteed way of saving under self-insured health insurance plans. The potential of savings for employers and employees usually depends on the prevailing circumstances. Employers have to prepare plans with risk in mind and choose a comprehensive stop-loss policy. They can also negotiate the cost of administering the plans with their third-party administrator (TPA). Employees may negotiate prices with their employers or inquire about available discounts. An employee who cannot afford their self-insured health plans may seek cheaper alternatives by talking to a Texas-licensed insurance agent.
An employer can negotiate the cost of administering its employees’ self-insured plans with their third-party administrator (TPA). An employer can get administration cost estimates from the currently licensed TPAs in Texas. They can also ask fellow employers or speak to an insurance agent with self-insured health insurance experience.
An employee can also negotiate the price of their plan with their employer. This may require them to give up certain health benefits. Generally, the possibility of negotiating the price of self-insured plans usually depends on the employer.
Employers can save on self-insured health plans by doing two things: preparing a plan with risk in mind and choosing a comprehensive stop-loss coverage.
Preparing a Plan With Risk in Mind: A self-insured health plan allows an employer to access employee healthcare usage data. This data is crucial in preparing plans. An employer can use it to make informed decisions regarding plan benefits instead of relying on an insurance company’s offer. Plans can be designed to emphasize preventive care. For example, an employer can create a value-based plan to encourage employees to seek treatments for conditions before they worsen. They can also choose particular programs according to the employee’s needs, like care coordination, disease management, and pharmacy benefits packages. Furthermore, employers can reward employees for improving health behavior, which in turn will directly benefit the employer financially. Overall, employers can take advantage of the potential for financial gain or savings from having a healthy and productive workforce.
Choosing a Comprehensive Stop-loss Policy: Stop-loss insurance covers an employer’s losses from self-insured plans when they exceed a particular limit. Employers can protect themselves against financial risks by tailoring their stop-loss insurance to their specific requirements.
Most businesses require a mix of two types of stop-loss insurance. Individual stop-loss, also known as specific stop-loss, covers a large claim on a single person. Aggregate stop-loss sets a limit on how much an employer must pay in total for qualified expenses throughout the course of a contract period. Any aggregate claims would be reimbursed to the employer at the end of the contract period by the insurance company.
Employees can save on self-insured health insurance plans by using the services of in-network health providers because most health benefits are fully enjoyed at low costs when using their services. Employers also can speak to licensed insurance agents and brokers in Texas to help them determine the best way to save on their self-insured health insurance plans. An insurance agent will help review the policy and recommend effective ways that an employee may save on the plan.
If you cannot afford self-insured health insurance, you may speak to your employer through your plan administrator or the Human Resources Department. They may create a plan that you can afford or give you discounts. If you still cannot afford it, you may purchase another health insurance plan that fits into your budget. A short-term health insurance plan is a common choice in Texas. You can also sign up for a bronze or silver plan through the Texas health insurance Marketplace. If you do so, check to know if you qualify for premium subsidies, which can help you save money on your premiums. You can also see if you qualify for the hardship exemption, which will allow you to purchase a catastrophic plan on the Marketplace.
You can also enroll in Texas Medicaid if you cannot afford self-insured health insurance. This is a joint federal-state health-assistance program for persons with low income and resources. You can check your eligibility for Texas Medicaid by calling 211 or (877) 541-7905 (711 for TTY) or apply for it directly on the Texas Benefits website.
Overall, the best course of action is to speak with a licensed insurance agent in Texas about your alternatives depending on your unique circumstances. An agent can provide you with the best advice on what you should do.
The plan administrator determines whether the cost of a self-insured health insurance plan can be paid upfront.
There are no particular discounts for self-insured health plans available to enrollees. However, some employers may provide discounts or other health benefits to employees as incentives. For example, the employee of the month or year in a department or the entire company may have access to preferred services or discounts on medical services.