What is Self-Funding?
Costs are based on actual claims - you pay for only what is used
When you choose to self-fund, you invest in a fund to pay the actual cost of your employee benefits plan rather than paying a premium to an insurance carrier.
The amount of money set aside is based on a professionally calculated risk analysis that helps determine the projected level of claims. Stop-loss insurance can be purchased to protect the plan from an individual catastrophic claim and/or aggregate claims that exceed a pre-designated level.
Money left over in the fund remains there, earning a return to help pay for future claims.
Custom-designed benefits meet the needs of your employees
In a self-funded plan, you decide which benefits to offer to create a plan best suited for your employees.
In addition, self-funded plans are regulated by the federal ERISA statute — eliminating many expensive and duplicative state-mandated benefits.
Should you consider self-funding?
Proven to save money
Employers who self-fund save money by paying only for actual claims, not a fixed premium for expected claims. Since 1999, healthcare costs have risen less for self-funded companies than for the fully insured.(Kaiser/HRET Employer Health Benefits 2016 Survey)
Consistent benefits for out-of-state employees
Because self-funded plans comply with federal law under ERISA and are exempt from state-mandated benefit requirements, multi-state employers can offer consistent benefit plans across the company.
Reduced state insurance premium taxes
The total premium paid by a fully insured plan is subject to state insurance premium taxes of up to 2 – 3%. With a self-funded plan, only stop-loss insurance is subject to the premium tax.