<style><!-- /* Font Definitions */@font-face       {font-family:Arial;       panose-1:2 11 6 4 2 2 2 2 2 4;       mso-font-charset:0;       mso-generic-font-family:auto;       mso-font-pitch:variable;       mso-font-signature:-536859905 -1073711037 9 0 511 0;}@font-face       {font-family:"ＭＳ 明朝";       panose-1:0 0 0 0 0 0 0 0 0 0;       mso-font-charset:128;       mso-generic-font-family:roman;       mso-font-format:other;       mso-font-pitch:fixed;       mso-font-signature:1 134676480 16 0 131072 0;}@font-face       {font-family:"Cambria Math";       panose-1:2 4 5 3 5 4 6 3 2 4;       mso-font-charset:0;       mso-generic-font-family:auto;       mso-font-pitch:variable;       mso-font-signature:3 0 0 0 1 0;} /* Style Definitions */p.MsoNormal, li.MsoNormal, div.MsoNormal       {mso-style-unhide:no;       mso-style-qformat:yes;       mso-style-parent:"";       margin:0in;       margin-bottom:.0001pt;       mso-pagination:widow-orphan;       font-size:12.0pt;       font-family:"Times New Roman";       mso-fareast-font-family:"ＭＳ 明朝";       mso-fareast-theme-font:minor-fareast;}.MsoChpDefault       {mso-style-type:export-only;       mso-default-props:yes;       mso-fareast-font-family:"ＭＳ 明朝";       mso-fareast-theme-font:minor-fareast;       mso-fareast-language:JA;}@page WordSection1       {size:8.5in 11.0in;       margin:1.0in 1.25in 1.0in 1.25in;       mso-header-margin:.5in;       mso-footer-margin:.5in;       mso-paper-source:0;}div.WordSection1       {page:WordSection1;}--></style>One of themost important HR issues for small businesses today is managing health carecosts. While alternative insurance models have long been available tocompanies, the popular self-funded model historically appealed to largercompanies alone. Now, with health care reform and the availability of broaderpolicies better suited to smaller companies, self-funding is a viable andincreasingly popular model for the country’s smaller employers. Why Self-Funding Now?Self-fundedhealth care insurance plans offer an alternative that can allow smallbusinesses to reduce and manage their employee health care costs while stilldelivering the health coverage that their workforce demands. In a self-fundingmodel, the company is responsible for covering all claims in the health careplan. While workers continue to pay premiums and deductibles, the employeragrees to cover claims up to a certain level based on the total number of anticipatedclaims over one year. This allows organizations to limit their maximum exposureor risk to costs. However, when claims exceed that point, employers would beliable if they could not purchase stop-loss policies that reimburse the companyfor costs associated with catastrophic claims or higher levels of claims. It is theability to purchase stop-loss policies that mitigates much of the risk forself-funded businesses. While stop-loss policies have been available for sometime, the health care reform legislation has influenced the market, allowingstop-loss providers to offer coverage to smaller companies. In fact,historically companies with fewer than 75 workers were unable to pursue aself-funded model because stop-loss policies were not available for them. Now,providers are offering coverage to companies with as few as five employees. Theself-funded business model has also been more common among large companiesbecause their claims risk can be spread over a broader employee population. Withsmall companies, the risk is higher because one major unexpected claim could presentsignificant financial consequences. Thecoinciding factors of rising health care costs with changes in policies due tohealth care reform means more small companies are turning to a self-fundedbusiness model. In fact, according to the Aflac WorkForces Report, 61 percentof small businesses with fewer than 100 employees are self-funded, 44 percentof which net less than 5 million in total revenue.*Additional Ways to EffectivelyMitigate Risk Voluntary Benefits Offer “Insurance”for Self-Funded Models As moresmall businesses turn to self-funded models, voluntary benefit solutions areyet another means of lowering the risk of their self-insured medical plan.Voluntary benefits, also called supplemental coverage, represent a variety ofinsurance policies made available to and paid for by employees as a voluntaryoption. These plansprovide a wide range of coverage choices, including short-term disability,life, dental, and vision. But perhaps most relevant to self-funded companiesare voluntary critical illness, hospital indemnity and accident plans that canprovide much-needed cash benefits to policyholders faced with highout-of-pocket expenses associated with these health events. Forexample, a business composed of an employee population made up largely of youngfemales may decide to lower the out-of-pocket expenses relating to pre-natalcare as a way to reduce the number of at-risk pregnancies—a goal that not onlyhelps safeguard against high medical costs but that also helps to promote themedical plan within the organization. Similarly, the same company can further reducethe cost to the plan by increasing the out-of-pocket limits for certain events,such as prostate cancer, while offering voluntary insurance plans as a way foremployees to retain adequate insurance and financial protection. Manycompanies that are making voluntary plans available are also seeing reducedworker compensation costs. Nearly 3 in 10 of these businesses say they havefound a correlation between their voluntary offerings and reducing their riskof workers’ compensation claims. Twenty-five percent of companies currentlyoffer voluntary insurance benefits. Of those, 30 percent experienced lowerworkers’ compensation claims since they began offering voluntary insuranceplans.* Manybenefits decision-makers rest easier at night knowing they have the option ofearmarking the cost savings they achieve through high-deductible components of theirmedical plan to offset higher-than-expected claim activity in a given year whilehaving the confidence that the voluntary benefits they have in place will help provideprotection for their valued employees and only enhance their overall benefitsprogram. Effective Data Gathering,Health-Risk Assessments Particularlyconsidering the smaller number of employees, small companies benefit greatlyfrom conducting health-risk assessments to provide insight into the overallhealth, potential health risks, and demographics of the employee population.This exercise is tremendously valuable in helping companies select theappropriate coverage package that will minimize their costs.  The rightdata gathering combined with low turnover of workers helps maintain the rightlevel of coverage and health plans for the organization. It also allows thecompany to make better decisions about the potential savings it receives fromunpaid claims. For example, some businesses choose to save that money as areserve to cover unexpected costs while others choose to write it off as a costsavings to improve the bottom line.  Utilize Wellness Initiatives toLower Claims, Premiums for Workers Implementingwellness programs can deliver cost savings to the company and the employee.Some smaller organizations offer incentives in the form of reduced monthlypremiums for things like quitting smoking, losing weight or lowering theircholesterol levels, all of which also improve the employer’s bottom lineconsidering that often it is a smaller percentage of workers who are unhealthy butwho can impact the majority of health claim costs. By focusingon changing the behavior and lifestyle of high-risk employees, the risk ofcatastrophic claim costs is minimized. Some smaller organizations have evenprovided staff nurses or doctors at the worksite who can better manage theemployee population and curb more serious trips to the ER or hospital. ConclusionEmployersof all sizes these days are seeking ways to control spiraling health carecosts. But for smaller organizations, a new effective alternative totraditionally funded health care plans is up for consideration. Although on thesurface, the idea of self-funding for smaller companies seems counterintuitivegiven the assumption of more risk, the reality is that this new health caremodel is proving to help control costs, to deliver valuable and expectedbenefits to workers, and ultimately to improve the bottom line.  *2012 AflacWorkForces Report, a national study conducted by Research Now on behalf ofAflac, February 2012.