Episode #: 4
EPISODE SUMMARY:
If your health plan had a great year, with fewer claims than expected, who keeps the money: you or your insurance company? For most small businesses, it's the carrier, and most owners have never thought to ask.
In this episode, Don Hicks pulls back the curtain on benefits funding, the business model underneath every employer health plan. With health benefit costs rising at the fastest pace in 15 years and family premiums approaching $27,000, how you pay for benefits has become just as important as which plan you offer.
Don walks through the six main ways employers fund health benefits: fully insured, level-funded, self-funded with stop-loss, group captives, ICHRA, and PEO master plans. He explains how each one works, who carries the risk, who keeps the savings, and which kinds of employers each model fits. He also covers the pharmacy and hospital cost levers that open up once you control your plan, the fiduciary duties every plan sponsor carries, and the myths that lead employers to the wrong decision.
Whether you own the business, lead HR, or advise employers, you'll walk away with a clearer way to evaluate your plan before your next renewal.
KEY TAKEAWAYS:
- Your health plan has a business model. How it's funded decides who carries the risk, who keeps the savings in a good year, and how much data you see.
- Costs are rising fast. Mercer projects a 6.5%–6.7% per-employee increase for 2026, the highest since 2010, taking the average above $18,500 per employee.
- "Alternative" funding is now the mainstream. 27% of covered workers are in self-funded plans, and 37% of covered workers at firms with 10–199 employees are in level-funded plans.
- There is no single right answer. The best model depends on cash flow, workforce health, risk tolerance and how involved you want to be.
- Don't compare quotes alone. Exit costs, run-out claims, stop-loss terms and service often matter more than the year-one price.
- Start early. Give yourself 120–150 days before renewal to evaluate alternative funding.
FREE RESOURCE:
- Is Your Health Plan Funded the Right Way? A free self-assessment checklist that walks you through what you have today, your risk and cash-flow profile, which funding models fit your situation, cost levers you may be missing, fiduciary basics, and the questions to ask before you switch. Found at https://theemployerbriefacademy.com
RESOURCES MENTIONED:
KFF: https://www.kff.org/health-costs/2025-employer-health-benefits-survey/
INFO ON THE SHOW:
- Website: https://theemployerbriefacademy.com
- Episodes Release Dates: Weekly, Every Wednesday
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https://theemployerbriefacademy.com
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- Book a Speaking Engagement Consultation: https://calendly.com/don-hicks-hr-business-consulting/consultation-w-don-hicks-the-employer-brief-ac-clone
Next Episode Description: Guest Appearance by Business Owner and Author, Annabelen Hemelgarn, with Ignite Design Online