Crossroads of tech and benefits: Navigating self-funded benefit plans in 2024

A new year brings new excitement and self-funded plan sponsors should channel this enthusiasm towards successfully navigating new challenges they will surely face. Managing a self-funded plan requires careful and consistent oversight. Plan materials and documentation must be reviewed at least annually to ensure compliance, the financial stability of the plan must be considered, and plan benefits aligned with evolving needs and expectations of employees, so they and their dependents have access to robust benefits.

Having a regular assessment of the plan will help identify areas needing improvement, ways benefits can adjust to the needs of participants, and optimal safeguards against risks or liabilities. Every year a self-funded plan sponsor is required to manage the following functions:

• Compliance: Compliance with state and federal regulations, such as the Affordable Care Act (ACA), Employee Retirement Income Security Act (ERISA), Health Insurance Portability and Accountability Act (HIPAA), Mental Health Parity and Addiction Equity Act (MHPAEA), and the Consolidated Appropriations Act (CAA). Staying informed of the latest legal and regulatory changes to these statutes is critical.
• Benefit review: Assessing the plan benefits and adjusting them to ensure that they continue meeting the needs of the existing employee population and company goals (i.e., ACA out- of-pocket maximums, scope of benefits, compliance mandates).
• Financials: Taking prudent planning measures, such as ensuring that the self-funded plan will be financially viable, reviewing the claims data, setting the correct contributions for the plan participants, and working with stop loss carriers to ensure that the correct policy is in place.
• Reporting and testing: Managing necessary plan reporting functions such as the non-discrimination testing, 5500 reporting, and CAA reporting requirements.

In addition to these requirements, it is important to remember that employee health benefits are an employee benefit and should be used as a tool by the employer to both retract and retain talent. To maximize the effectiveness of the health benefits as a recruitment tool, the self-funded plan sponsor should engage with experts to evaluate both compliance matters and best practices. Plan sponsors should seek input not only on industry standards, but also the best ways to ensure that plan benefits attract top talent and align with legal requirements and current industry trends. For example, some areas for recommended review include:

• Cost controls: Maximize the opportunities to implement cost controls such as employee benefit incentive programs or incentivize certain plan participants by using a unique plan design structure. This could include developing benefits that improve employee health outcomes and contribute to lower health care costs.
• Employee education: Hold plan participant education workshops to ensure that members are aware of the benefits available to them and know how to properly access (and effectively use) the benefits. It is important that any changes in the plan are clearly communicated to the employees.
• Fiduciary obligations: Uphold one’s fiduciary responsibility by acting in the best interests of the plan participants, while also balancing the responsibility of ensuring that only reasonable plan costs are paid.

In addition to being cognizant of requirements and best practices, employers now must understand how new innovative technologies and solutions, namely artificial intelligence (AI), will impact their businesses and benefit offerings. The use and integration of AI is becoming an increasingly relevant point of discussion as employers are considering whether AI could be used to streamline processes, offer personalized assistance, or otherwise advance employee experiences and trainings. For example, there are many potential use cases for employers hoping to leverage AI for the betterment of their health plan offerings:

• Predicting trends and analytics: Predicting trends and health care outcomes to help employers make decisions. For example, utilization of data analytics may be useful to understand patterns, high-cost claim scenarios, and areas in which cost savings may be realized.
• Accessing virtual services: Using AI to optimize telehealth services to ensure expanded access to care and benefits.
• Employee support: Creating tools to help employees understand their benefits and coverage options.
• Employer efficiency: Developing methods to automate certain administrative tasks or functions associated with managing health benefits that an employer would normally oversee.

However, the regulatory framework supporting the use of AI in building tools such as these is still evolving. So as employers consider the best way to leverage AI, they should be aware of the impact it may have on data privacy and security, sensitive personal information, and potential breaches. Only by appropriately using AI as a tool, not as a replacement, can employers be sure to counter such concerns with AI. Employers, in conjunction with their trusted consultants, should review their goals to understand the extent to which AI can enhance their benefits in a safe and secure manner.

In fact, just this past October, President Biden issued an Executive Order (EO) to establish standards for AI safety and security amidst the development of further regulations. Among other important directives, the EO does have one for the Department of Health & Human Services (HHS) to establish a task force to develop a strategic plan for the responsible use of AI as it pertains to health care. The implications of the EO are significant and highlight the government’s commitment to ensuring that AI development in health care is conducted responsibly while prioritizing safety, privacy, and equity.

Related: How will AI move the benefits needle?

Considering AI’s growing potential to have a transformative impact on health care, self-funded employers will be well-positioned to have a successful 2024 plan year by thoroughly reviewing and addressing these matters:

• Implementing required plan changes: Collaborating with consultants and experts to ensure that plan materials are compliant and include relevant changes to address the evolving regulatory landscape. Carefully review all reporting and testing requirements to ensure that obligations are satisfied according to the relevant deadlines.
• Incorporating best practices: Consulting with experts to understand the best ways to maximize the benefits for employees and making updates to encourage utilization of benefits in the most efficient and effective manner.
• Embracing AI: Discussing the opportunities of AI and how it will change the way in which the employer (or the employer’s vendor partners) manages the plan while actively monitoring the shifting regulatory AI landscape.