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What is Self-Funding?

Why Self-Fund?

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.