The answer is yes if they wish to reduce their health care costs and take more control of their plan design.

IS SELF FUNDING FOR EVERYONE?

The simple answer is no.  A group of 125 or more employees with an average age in the 30’s with predictable claims experience is an ideal candidate.

HOW DOES SELF-FUNDING WORK?

Under traditional plans the client pays for the cost of claims, claim reserves and administrative expenses.  The profit from unused claim dollars is retained by the Insurer.

Under a self-funded plan when the client has had a low level of claims throughout a year, the client eliminates the profit margin portion of the premium that would have been paid to the insurer and keeps the savings instead of paying the additional profit to the insurance company.

Why do employers self-fund their plans?

• Employers can save considerable money through a new plan design that takes advantage of the most up-to-date cost containment strategies.

• There doesn’t have to be any noticeable change in the plan unless the employer so wishes.

• Every aspect of the plan administration becomes subject to competitive market pricing, thereby, saving money on such items as claims administration, printing of summary plan descriptions etc.

• The employer receives increased interest from his reserves.

• The employer retains control over the health plan reserves, enabling maximization of interest income

• .Insurance companies are subject to state regulations; self-funded plans only to federal regulation, thereby giving an employer almost total control of the plan design.

• An employer does not have to pre-pay coverage, thereby improving their cash flow.