Employee benefit expenses are amongst the most costly for many dealerships. Managing these expenses should be top priority for any owner wanting to increase his/her bottom line. Attracting and retaining top talent is also crucial for growing revenue.
How can dealership owners both enhance their benefit package, attracting and retaining top talent, while saving money year after year? Something gaining popularity over the last couple years, ”self-funded with stop-loss insurance” aka “partial self-funded plans”, is what some dealerships have implemented successfully. Traditionally these plans were available only to employers with over 500 employees. Recently stop-loss insurers have seen the need and opportunity in the below 500 employee, employer market, making these plans available to businesses with at least 20 employees. This gives small to medium size dealerships opportunity to gain control over benefit spend.
In a nut shell these plans allow dealerships to self fund claims for each covered individual up to a specific dollar amount (specific deductible), usually $40k-70k. Once claims accrue past the specific deductible for any covered individual, stop-loss insurance kicks in to cover the rest. Under these plans “aggregate coverage” is also in force to hedge your overall plan year spend. Traditionally a third party administrator facilities underwriting, plan set up and administration. To the employee the plan feels and acts like a traditional, fully insured plan. Dealership coverage needs and desires are different. Self funded plans can be custom tailored to each dealership, from benefit design to hospital network utilization.
If set up and managed correctly, these plans yield claim surplus most years. The surplus can be used as desired, lowering benefit costs, enhancing benefit offerings, taken as profit or used for 401k match/contribution etc. Success is amplified when claims and risk are actively managed. Effective claim and risk management is hard to come by. Partnering with an experienced broker and third party administrator who both understand claim and risk management is crucial to running a successful self funded plan.