Renting vs. Owning Your Health Insurance: Why "Safe" Isn't Always Smart
Most employers treat their health insurance like rent – pay the monthly premium, hope nothing breaks, and accept whatever increases the landlord decides to impose. But what if you could own your coverage instead?
The distinction between renting and owning your health insurance comes down to control, risk, and long-term financial impact. Here's what most benefits advisors won't tell you about why you might be overpaying for the illusion of safety.
The Fully Insured Reality: Paying for "What If"
Fully insured plans function like rental agreements. You pay a fixed premium each month, and the insurance carrier assumes all risk. Sounds safe, right?
Here's the problem: you're prepaying for healthcare your employees may never use. Whether your team has a healthy year or faces unexpected claims, your premiums will likely increase next renewal. You're essentially paying rent on someone else's property with zero chance of building equity.
The insurance company wins either way. Low claims year? They keep the surplus. High claims year? They spread the cost across their entire book of business and raise everyone's rates.
Self-Funding: Taking Ownership of Your Health Plan
Self-funding flips this model. Instead of paying predetermined premiums, you pay actual claims plus administrative fees. You own the plan, control the design, and keep any unused funds.
Think of it as buying instead of renting. Good years benefit your bottom line. Challenging years are cushioned by stop-loss insurance – the same protection you'd have with a fully insured plan.
Key Benefits of Self-Funding:
Level-Funded Plans: The Best of Both Worlds
Level-funded plans offer a middle ground for employers who want ownership benefits with predictable monthly costs. You pay a fixed amount each month, but unlike fully insured plans, you have a stake in the claims account.
If claims run lower than expected, you receive a refund. If they exceed projections, stop-loss insurance kicks in. You get the same safety barriers as fully insured plans without prepaying for unused healthcare.
Why Most Advisors Push Fully Insured Plans
The truth most brokers won't share: fully insured plans are easier to sell and often generate higher commissions. It takes minimal effort to shop carriers and negotiate a 5% increase instead of the proposed 15%.
Real alternative funding strategies require:
Most advisors lack the skills or motivation to do this work. They push the easy button and collect their commission.
The Real Cost of "Safety"
That fully insured plan isn't as safe as it appears. Consider these realities:
Stop Paying Rent on Your Health Insurance
The choice between renting and owning your health insurance comes down to one question: Do you want control over your second or third largest business expense, or are you comfortable letting someone else make those decisions?
At DSG Benefits, we believe employers deserve better than the status quo. We're willing to put our fees at risk to prove alternative funding can work for your organization.
Ready to stop paying rent on your health insurance? Let's explore what ownership looks like for your business.
**Schedule a 15-minute call to discuss your options: **calendly.com/davidgoldfarb/15-minute-call
The healthcare market changes constantly. Make sure you're working with an advisor who understands alternative funding strategies and isn't just pushing the easy button with another carrier switch.