Self-Funded Benefit Plans
A self-funded, or self-insured plan, can provide you with the flexibility to design a benefit plan suitable to your organization.
The Basics of Self-Funding:
In a self-funded plan, the employer assumes the financial risk for providing healthcare benefits to employees. As a result, self-insured employers pay for claims as they are presented instead of paying a pre-determined premium to an insurance carrier with a fully-insured plan. When properly administered, employees will see little difference between a fully-insured plan and a self-funded one.
Benefits of Self-Funding:
By self-funding with a third party administrator, employers have the opportunity to reduce administrative costs, increase flexibility and expand the services offered to employees. Some additional benefits of self-funding include:
- Access to national and local provider networks
- Good claims experience provides an opportunity for savings
- Freedom to design unique benefit plan specific to your needs
- Clear cost justification and documentation through improved reporting
Self-Funding & Healthcare Reform:
The graph below illustrates the anticipated affects of healthcare reform over the next 3 years for a self-funded versus fully insured plan. (Assumes a 25% per year increase for a fully-insured program and a 12% per year increase for the self-funded program.)
Minimum Loss Ratios
Is Self-Funding Right for You?
If you have 25 or more employees, a stable and/or growing employee base, you may be a good candidate for self-funding.
To find out if you should self-fund, contact EBSO or talk to your broker today.