Have you ever considered a Self-Funded Medical Insurance plan?

Many times, the answer we hear is  “ we thought about it but it was too risky” But is that really true?  A properly designed Self-Funded Medical Insurance plan with adequate Stop Loss protection outlines all risks and illustrates a maximum claims liability that can be compared to current premium costs and makes it easy for organizations to budget future expenses.

Self -funded Medical Plans provide an opportunity for organizations to stabilize costs long-term by providing transparency and flexibility to initiate cost-reduction strategies that can address the cost of care.  This is a problem that is hard to address in fully insured plans. In fully insured plans you pay level premiums that are calculated prospectively therefore you do not receive any benefit for positive claims experience.  In a Self-Funded program if claims are better than expected you save money in real time.

What is Self-Insurance?

Self-insurance or self-funded health care is a process by which an employer provides health benefits to its employees, funding claims from a specified pool of assets through a Third-Party Administrator rather than through an insurance company, as is traditionally done. In self-funded health care, the employer assumes part of the risk of paying claims and purchases Stop Loss Insurance to protect against Large Claimants and high Aggregate Claims. 

The Benefits of Self-Funded Healthcare

• Governance– Self-Funded plans are governed under ERISA rather than the state allowing plans to avoid certain state taxes and mandates.
• Flexibility- Employers have the ability to create plan designs in accordance with their needs and have greater financial flexibility in designing Stop Loss contracts and potential cash flow improvements.
• Transparency- Self-Funded plans provide claims data in real-time allowing plan sponsors to use the information to initiate programs that can drive down cost.

Self-funded health insurance plans aren’t for everyone but in an environment that is producing higher than-ever health insurance increases, and with recruiting and retention being more difficult, all organizations that qualify should learn more about the benefits and risks of self-funding before deciding whether it’s right for their organization.