Self-Funded Health Plans
Increase Flexibility AND Manage Risk
Self-funding can provide the flexibility to design a plan that is best suited to your organization and your members. The information gained from administering claims will help your organization better manage the risks and future costs of health care.
In a traditional insured plan, rates are fixed for a year and monthly premiums are based on the number of employees enrolled. The insurance company collects the premiums and pays the health claims based on the policy’s benefits. When a plan is self-funded, fixed costs such as administrative fees are billed monthly based on enrollment but the employer pays claim costs as they are incurred.
Stop-loss insurance reimbursements are made if claim costs exceed catastrophic claim levels, making the total cost equal to fixed costs plus claims less any stop-loss reimbursements. When claim costs are lower than expected, the savings remain with the employer and not an insurance company.