As healthcare costs continue to increase, due in some part to advances in medical and pharmaceutical technology, and a less than buoyant economy, it is important to re-evaluate the way employers provide healthcare benefits for their employees. A self-funded plan, such as a Trust, is one way in which a plan/scheme controlled by us and the employer funds healthcare benefits directly for the employees (beneficiaries).
In practical terms, this means that self-funded employers pay for each claim as it is presented instead of paying a fixed premium to an insurer for a fully insured scheme. A Trust allow employers to select benefits to suit the needs of their employees, and gives them the scope to only select benefits which are both relevant and affordable. It is also worth considering local NHS provision when considering a benefit schedule, as the structure of the benefits’ table might well reflect the quality of NHS services. A healthcare Trust is governed by a Trust Deed and specifies the terms of the contract. In addition, an administration agreement is also put in place which reflects the wishes of the employer and the responsibilities of the Trust administrator.
A Trust is able to pass on substantial savings in practically every area of company healthcare. It is like buying healthcare direct, without incurring all the costs and charges usually associated with large, traditional, rigid insurance companies.
You also won't have to pay Insurance Premium Tax, Policy Holder Protection Levy or pay for underwriting profits, all of which add up.
The Trust is administered for your benefit. It is initially set up by your company, who then funds the Trust much in the same way as you would previously have paid an insurance premium. The Trust has its own bank account, and interest earned in that account is to your benefit - not the insurance company's (which is the case with insurance schemes).
The Trust fund is administered exactly in accordance with the company's wishes. Therefore, everything that is connected with the Trust is performed with the company's wellbeing in mind. This is most obviously demonstrated in the flexibility of the benefit schedule, the discretion shown by the Trust and the fact that the Trust is run with an absolute minimum of on-costs. This provides the beneficiaries with more available funds with which to pay claims, than would normally be the case with an insurance contract.
Trusts have been in existence in the UK for several hundred years and have latterly been developed for the provision of healthcare. With client companies now seeking to contain costs, deliver more appropriate benefits and have more control over how they spend their money, Trusts are being seen as a vehicle that can deliver all of these benefits.
The best of both worlds.