What is Self-Funding?

A self-funded (or self-insured) health plan is one in which the employer assumes some or all of the risk on a health plan for their employees.

Although Self-Funding is often thought about as being too risky, a properly designed health benefits program actually contains more risk protection than traditional insurance programs. As more employers understand this funding method, many have left the traditional full premium plans and have saved hundred of thousands of dollars, while gaining a greater control over their health care cost.

Increase cash flow

• Traditionally in a fully insured environment, the insurance carrier retains the reserves for incurred but not reported claims. Normally, this represents approximately 25% of annual claims.

• The self insured concept allows the employer to retain these reserves in their own cash flow and thus any earnings derived from this use of these reserves will be kept by the employer and not the insurance company

• A savings result from lower claims administrative cost, premium taxes, etc.

Employer Control

• The employer can work with the TPA to design a benefits plan tailored to their employee's needs.

• The employer will have far more knowledge in terms of claims utilization and trends to more effectively design benefit programs in the future.

More about our Self-Funding Administrative Services