Self-Funding
Insurance
Did you know over 60% of U.S. employees are currently covered under a self-funded medical plan? Self-funded group health plans continue to grow in popularity. Our team is ready to provide self-insurance education, support and solutions.
Self-Funding
Insurance
Did you know over 60% of U.S. employees are currently covered under a self-funded medical plan? Self-funded group health plans continue to grow in popularity. Our team is ready to provide self-insurance education, support and solutions.
What is Self-Funding Insurance?
Self-funding is a financial arrangement in which an employer funds health care claims independently rather than utilizing an insurance company to purchase health coverage for its eligible employees. Due to both rising costs and increased instability in the healthcare marketplace, self-funded plans have become the most common type of health plan for employers to provide quality health benefits to their employees and dependents.
Although self-funded plans present many advantages, employers should consult with self-funding specialists to determine if self-funding is the best solution for their organizations. The employer’s financial condition, cash flow, risk tolerance, and desire for flexibility in creating their health plans are some of the factors that should be carefully evaluated when converting from a fully insured plan to a self-funded arrangement.
What is
Self-Funding Insurance?
Self-funding is a financial arrangement in which an employer funds health care claims independently rather than utilizing an insurance company to purchase health coverage for its eligible employees. Due to both rising costs and increased instability in the healthcare marketplace, self-funded plans have become the most common type of health plan for employers to provide quality health benefits to their employees and dependents.
Although self-funded plans present many advantages, employers should consult with self-funding specialists to determine if self-funding is the best solution for their organizations. The employer’s financial condition, cash flow, risk tolerance, and desire for flexibility in creating their health plans are some of the factors that should be carefully evaluated when converting from a fully insured plan to a self-funded arrangement.
Did you know?
More than 60% of U.S. employees are currently covered by a self-funded medical plan. The Affordable Care Act has increased employers’ interest in self-funded medical plans.
Skyline Benefit expects the trend to continue.
The percentage of U.S. employers covered under self-funded medical plans.
Source: Number of employees covered under a partially or completely self-funded medical plan according to Kaiser/HRET’s Survey of Employer Sponsored Health Benefits, 1999–2018.
Did you know?
More than 60% of U.S. employees are currently covered by a self-funded medical plan. The Affordable Care Act has increased employers’ interest in self-funded medical plans.
Skyline Benefit expects the trend to continue.
The percentage of U.S. employers covered under self-funded medical plans.
Source: Number of employees covered under a partially or completely self-funded medical plan according to Kaiser/HRET’s Survey of Employer Sponsored Health Benefits, 1999–2018.
Advantages of Self-Funding
Improved Cash Flow
Self-funding allows claims to be paid as they are incurred while fully insured premiums are subject to prepayment.
Innovative Plan Document Design and Control
Employer has control of the plan design instead of the insurance company. The plan/benefit design language can be modified to fit individual plan needs and more accurately reflect the true intentions of the plan.
Charges, Commissions and Retention
Compared to fully insured plans, self-funded plans can allocate more of each dollar toward the payment of medical claims by eliminating insurance commissions, risk charges and other costs of a commercial insurer.
Tax Savings
The employer is not subject to state health insurance premium taxes and ACA insurer tax which allows more money to be allocated to claims cost. Self-insured plans are regulated under federal law and are protected by ERISA.
Value-Based Benefits and Wellness Programs
Employers have the flexibility to design and integrate programs such as health risk assessments, disease prevention, and wellness programs. These programs are managed by disease management experts, who actively engage at the group and member level.
Stop Loss Coverage
Employers have the option to purchase stop-loss coverage. Stop-loss can be purchased to limit the financial exposure to any one individual and/or aggregated claims experience. The exposure (specific deductible) is determined by an employer’s risk tolerance, financial resources, location, benefits plan, PPO network and claims experience.
Advantages of Self-Funding
Improved Cash Flow
Self-funding allows claims to be paid as they are incurred while fully insured premiums are subject to prepayment.
Innovative Plan Document Design and Control
Employer has control of the plan design instead of the insurance company. The plan/benefit design language can be modified to fit individual plan needs and more accurately reflect the true intentions of the plan.
Charges, Commissions and Retention
Compared to fully insured plans, self-funded plans can allocate more of each dollar toward the payment of medical claims by eliminating insurance commissions, risk charges and other costs of a commercial insurer.
Tax Savings
The employer is not subject to state health insurance premium taxes and ACA insurer tax which allows more money to be allocated to claims cost. Self-insured plans are regulated under federal law and are protected by ERISA.
Value-Based Benefits and Wellness Programs
Employers have the flexibility to design and integrate programs such as health risk assessments, disease prevention, and wellness programs. These programs are managed by disease management experts, who actively engage at the group and member level.
Stop Loss Coverage
Employers have the option to purchase stop-loss coverage. Stop-loss can be purchased to limit the financial exposure to any one individual and/or aggregated claims experience. The exposure (specific deductible) is determined by an employer’s risk tolerance, financial resources, location, benefits plan, PPO network and claims experience.