Self Funded Health Care Plans

As the cost of health care continues to rise, businesses are seeking ways to control their costs without negatively impacting the health of their employees. There is not a one-size fits all approach to lowering health care costs, but self-insurance, or self-funded insurance may be an important consideration for your overall strategy. A self-insured group health plan (or a 'self-funded' plan as it is also called) is one in which the employer assumes the financial risk for providing health care benefits to its employees. In practical terms, self-insured employers pay for each out-of-pocket claim as they are incurred instead of paying a fixed premium to an insurance carrier, which is known as a fully-insured plan. Typically, a self-insured employer will set up a special trust fund to earmark money (corporate and employee contributions) to pay incurred claims. Companies rely upon a third party administrator (TPA) to process claims and manage plan administration. Employers can purchase Stop Loss insurance to protect against catastrophic claims. Employers are reimbursed for claims that fall above a specific dollar amount.

More and more companies of all sizes are choosing to set aside funds to pay for the health care needs of their employees. Self-funded plans are customizable and more flexible than traditional, fully insured plans. They are subject to less regulation and offer companies the opportunity to customize their health care plan to meet their unique business needs. And because companies are paying only for the health care costs of their own employees, there may be money left over at the end of the year that can be used to reduce future costs. There are 3 basic types of self- funding healthcare plans;