Employers Who Self-Fund Enjoy Advantages
The advantages of self-funded health plans are many. There is tremendous flexibility in the benefit plan design. You decide what you want to cover and what you don't, whether it's certain vaccinations, chiropractors, injetibles, obesity, or infertility.
Another major advantage is portability from one carrier to another. There is no disruption in plan when you shift between reinsurance/ medical stop loss carriers. You don't have to start all over again with new I.D. cards, booklets, and doctors, the way you do with traditional insurance.
By Self-Funding an employer can utilize one national network or PPO networks with the same benefits. Bottom line is cost savings. If you have a good expected claims year, that is the best scenario. Even if you don't there is maximum liability in place.
- Cash Flow Improvements
- Cost Savings
- Plan Control
- Plan Design Flexibility
- Savings Potential
Self-Funding reduces state premium taxes on a significant portion of the employer's plans; they earn interest on funds otherwise held by the insurer; plans are administered at a lower cost than insurers would charge. Along with these savings, there are additional cash flow advantages.
- Those who self-fund are rewarded for good claims experience over a period of time. If claims are not made, the money is kept in reserve where it builds against future claims.
- The carrier profit margin and additional risk charges that come with pooling multiple employers' claims experience are reduced.
- Premium taxes are greatly reduced, as they are only applicable to the stop-loss insurance premiums; not claims funds or administrative fees.
Additional Advantages
Plan Control - Employers who self-fund their medical plans can control health care costs, monitor benefits, and compensation payments more closely. In addition, self-funded plans permit easier integration of cost-containment measures.
Flexibility - A self-funded plan is not directly affected by insurance company requirements, therefore the employer can tailor the plan to meet the employer and employee's specific needs without having to seek insurer approval. This allows an employer to be responsive as well as to save time and money.
Employee Satisfaction - Employers are able to provide appropriate benefits at reduced costs so employees can keep more of their hard earned money. Employees often receive more personal service from a third party administrator (TPA) who knows the company. In addition, plan benefits and claims are typically paid much more quickly.