Self-Funded Benefit Plans

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SELF-FUNDED BENEFIT PLANS

A self-insured health plan allows an employer to have more financial control over their group health plan, as opposed to a traditional fully-insured plan with non-refundable premiums. When you self-fund, you only pay for the claims your group incurs. Self-funding is utilized by two thirds of all employers in the United States and continues to grow because of the flexibility and potential for savings it offers.

Self-Funding Explained

We have brought the benefits of self-funded insurance plans to over 5,000 companies, delivering the quality customer service that we would expect ourselves. Being self-insured ourselves, we understand the power self-funding offers, as well as what our clients need and want.

Self-funding your group benefit plan will eliminate the high costs of fully-insured premiums, which include: Profit Margins, Risk Charges, Reserves, Contingency Margins, State Regulations, Premium Taxes and Retention and Persistency Bonuses. In addition, benefit plan design will be customized to your group instead of an off-the-shelf plan from an insurance carrier.

Why Self-Fund?

Besides rising insurance premiums and over-utilization of group health plans, one of the biggest challenges employers face is the lack of claims data provided to them by the fully-insured carriers. The main reason for holding this information back is insurance companies’ fear that if employers actually knew what their costs were, very few would be fully-insured. Without this information, employers are at a disadvantage when trying to determine if self-funding can work for them.

Keeping in mind that insurance companies are for-profit companies, we have worked with many employers to face this challenge and moved them to a partially self-insured plan where they can benefit from the savings and flexibility that a self-funded plan can offer. Now these companies have access to monthly claim reports and greater control over one of their largest expenses – their health plan.

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Self-Funding Resources

Is Self-Funding Right for Me?

The questions and answers below will help you determine whether or not a partially self-funded health plan is right for your company. Click on a question below to view the answer.

You are practically guaranteed to save money in the first 12 months. Your claim payments will start the second or third month, so you save 12 month’s premiums while only paying 10 or 11 months claims. You, not the insurer, keep the money for the “incurred but unreported claims.” In addition, you do not pay premium taxes on your total premium. You will only pay taxes on the stop loss premium.

Your employee demographics will tell you. You need to properly understand any risk and the rewards involved.

You’ve heard of the 80/20 principle – you get 80% of your results from 20% of your efforts. It applies in health insurance, just as in everything else. The healthy 80% overpay and effectively subsidize the sickest 20%. If you’re willing to carry some of the risk for your group, self-funding can help you profit from that.

You’re not going to pay all of your company’s health claims. Rather, you partner with a stop loss insurer. You pay the small, frequent claims, and the carrier pays the larger, infrequent and unaffordable claims.

Your cash flow can fluctuate significantly, so be sure to maintain adequate reserves.

HEALTH & WELLNESS LINKS

Find resources and tools to make more informed decisions about your health and wellness.

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GLOSSARY OF TERMS

Find a list of commonly used terms and definitions that can help you better navigate your benefit plan.

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MY BENEFITS PORTAL

Our Online Portal and My Benefits Mobile App put your benefits right at your fingertips with accessible and useful features.

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