How Self-Funding Turned a 30% Renewal Crisis Into Long-Term Savings

When employers think about controlling healthcare costs, many assume their only lever is negotiating with carriers and hoping for a better renewal. But as healthcare costs continue to rise, that approach often isn’t enough — especially for small and mid-sized businesses with complex claims experience.

A recent client story at Altura Benefits shows how a thoughtfully designed self-funded plan can transform a seemingly impossible situation into a sustainable, cost-effective strategy — all while giving employees more flexibility and support.

A long-standing group client came to Altura Benefits facing a staggering 30% renewal increase for their January 2025 health plan. Even after negotiations with the incumbent carrier reduced the increase to 25%, the numbers simply didn’t work for the business long term.

The company had about 140 employees, and their annual healthcare spend was roughly $2 million, including approximately $450,000 on specialty medications alone. Other carriers declined to quote due to the group’s perceived risk, and moving employees to individual coverage through an ICHRA would have been an inefficient use of premium dollars.

It was clear the situation required a different approach — not just a better quote.

Instead of continuing to operate within the limitations of a fully insured plan, Altura Benefits helped the client transition to a self-funded model with a third-party administrator (TPA) and stop-loss coverage.

Self-funding opened the door to plan customization that simply isn’t possible with traditional carriers. Fully insured carriers are often restricted by prescription drug contracts, provider networks, and standardized plan designs, limiting flexibility when employers want to address specific cost drivers.

With a self-funded plan, the client implemented several targeted cost-containment strategies.

Because specialty medications represented a significant portion of spend ($450,000), the plan carved out these drugs and paired employees with concierge support to access manufacturer assistance programs. This helped dramatically reduce costs while ensuring employees still received the medications they needed.

One of the most impactful changes was replacing the traditional PPO network with a reference-based pricing (RBP) model — a fundamentally different way of paying for healthcare.

In a traditional plan, employers rely on a carrier’s network of contracted providers. Prices are pre-negotiated, but they can vary widely and often lack transparency. Employers are essentially locked into whatever rates the carrier has agreed to, with limited ability to influence costs.

Reference-based pricing removes the network entirely and instead ties payments to a transparent benchmark — typically a percentage above Medicare reimbursement rates.

Through a partner like ClaimDoc, providers are engaged before services occur, with negotiated rates often around 125% of Medicare. This pre-service negotiation is key because it ensures providers understand the reimbursement upfront, reducing the likelihood of balance billing and creating a smoother experience for employees.

Employees can nominate the doctors, facilities, or specialists they want to visit, and the RBP partner works to establish an agreement in advance. This flips the traditional model on its head — instead of being restricted to a network, employees gain choice while the plan maintains disciplined cost controls.

Reference-based pricing offers several advantages:

• Transparency — Payments are tied to a clear benchmark rather than opaque network contracts
• Cost control — Employers avoid inflated provider pricing common in some networks
• Provider flexibility — Employees can seek care where they feel most comfortable
• Negotiation support — Advocacy teams handle provider conversations and billing issues

While RBP requires strong communication and employee education, it can be a powerful tool for organizations looking to take greater control of their healthcare spend without sacrificing access to care.

In our client’s case, the impact of the new strategy was immediate and meaningful:

• No premium increase for 2025 (the current year at the time)
• Only a 2% renewal increase for January 2026, far below market trends
• Greater financial predictability for the employer
• More flexibility and support for employees

What started as a renewal crisis became a long-term strategy built around the client’s specific needs.

This case highlights a key advantage of self-funding: the ability to design a plan around real cost drivers instead of accepting a one-size-fits-all model.

Employers can:

• Carve out high-cost components like specialty drugs
• Implement innovative payment models like reference-based pricing
• Add targeted support programs for employees
• Gain transparency into where healthcare dollars are going
• Mitigate risk by purchasing reinsurance (stop-loss for large claims and the plan as a whole)

For many organizations, this level of customization can translate into significant savings and a better overall benefits experience.

Innovative plan strategies are only part of the equation. Altura Benefits also recognized that many employers struggle to understand their compliance obligations under regulations enforced by agencies like the U.S. Department of Labor and the Internal Revenue Service.

To support clients, Altura developed a structured compliance education process. After each renewal, the team meets with employers to review responsibilities, walk through detailed checklists, and help implement solutions or connect them with trusted vendors.

This proactive approach reduces risk, builds confidence, and ensures employers can operate smoothly in a complex regulatory environment.

At its core, this story demonstrates what’s possible when employers move beyond traditional insurance thinking. By combining strategic funding, targeted cost controls, and hands-on support, self-funding can transform healthcare from a volatile expense into a manageable, predictable investment.

For this client, the result wasn’t just lower costs — it was peace of mind, empowered employees, and a benefits strategy built to last.