Self-Funded Health Insurance

A Flexible, Lower Cost Option for Health Insurance

With the implementation of the Affordable Care Act, many small and medium sized businesses have seen a drastic increase in their group health insurance premiums. For some companies, these premium hikes have made the cost of providing health insurance to employees extremely expensive and, as a result, many employers have dropped their paid benefits.

If you are facing higher health insurance rates due to health care reform, a self-funded, or self-insured health plan offers another alternative to completely dropping your employer-paid benefits. Self-insured employers pay for each out-of-pocket expense as they are incurred instead of paying a fixed premium to an insurance carrier, which is known as a fully insured plan.

Typically, a self-insured employer will set up a special trust fund to earmark money (corporate and employee contributions) to pay incurred claims. Employers may decide to self-insure their health plans for a number of reasons, such as avoiding state insurance taxes and state benefit mandates, retaining more control over plan design and controlling reserves.

Benefits eligible for coverage under a self-insured plan:

  • Health care (indemnity, PPO, POS and HMO only if large enough group)
  • Dental
  • Short-term disability (STD)
  • Prescription drugs
  • Vision care

Evaluating Self-Insured Health Plans for Your Business

With a self-funded insurance plan, when your employees have few claims and few expensive illnesses, you can see an immediate positive impact on your overall company health care costs.

Most self-insured employers purchase stop-loss insurance on their self-insured health care benefit plans to reduce the risk of large individual claims or high claims for the entire plan. Britton Gallagher has experience with self-funded plans and stop loss coverage to develop a plan that is the right fit for your organization.

We will help you determine if a self-funded health insurance program is right for your business by examining the following areas:

Stop loss coverage options

  • Volume and nature of employee health claims
  • Cash flow analysis
  • Plan administration and monitoring
  • Coverage goals

According to federal statistics, self-funded plans cover 60 percent of the private-sector workforce—almost 90 million workers and dependents. According to a 2012 Kaiser Family Foundation survey, those numbers include 15 percent of small companies (fewer than 200 workers), and 52 percent of mid-sized companies (200 to 999 workers).

Contact a benefits client consultant today for more information or to evaluate if a self-insured health program is right for your organization.