Business self-funded health insurance, also known as self-funded healthcare, is a way for companies to provide health coverage to their employees while assuming a portion of the financial risk themselves. Here’s how it typically works:
- Initial Setup: A company decides to self-fund its health insurance plan by using a third-party administrator (TPA) to manage the plan and administration.
- Customized Plan Design: We design a health insurance plan tailored to the needs of your employees. This process includes selecting the types of networks, coverage, deductibles, co-payments, and out-of-pocket maximums.
- Funding Mechanism: Instead of paying fixed premiums to an insurance carrier that are gone forever, your TPA will divide the premium into three categories:
- Claims Fund: A portion of your premium is retained in a claims only account. If there are leftover funds at the end of the policy year, your company will receive a rebate check.
- Stop-Loss Insurance: This policy kicks in if the company’s healthcare expenses exceed the claims fund, protecting you from catastrophic costs.
- Administration: The TPA manages the day-to-day administration of the plan, including processing claims, providing customer service, and negotiating rates with healthcare providers.
- Claims Management: When an employee seeks medical care, the TPA pays the healthcare provider directly from the self-funded claims fund or stop-loss. The TPA handles claims processing.
- Regulatory Compliance: Self-funded plans are often subject to various state and federal regulations, including ERISA (Employee Retirement Income Security Act). I will handle regulatory compliance on your behalf.
- Employee Benefits: Employees benefit from self-funded plans through lower premiums, more customized coverage, and often a greater say in their healthcare choices. They may have access to a wider network of healthcare providers.
- Financial Flexibility: Companies can adjust their contributions and plan design as needed to manage costs and adapt to changing circumstances.
- Tax Benefits: Self-funded plans may offer tax advantages, as companies only pay taxes on the funds used for claims rather than fixed premiums.
In summary, business self-funded health insurance allows companies to take a more active role in managing their employee health benefits. It offers customization, potential cost savings, and flexibility but requires careful planning, risk management, and compliance with regulations.
Starting a Self-Funded quote is easy and I am here to help.
- If we have not spoken yet, please reach out with a quick call, email, or schedule an appointment.
- Have your employees and/or contractors complete an employee questionnaire. I recommend Aetna and Allstate. These are direct links to secure e-sign forms:
- Once I have all of your information, please allow 2-3 business days for quotes.
- We will review the quotes together and discuss options.
- When we have come to a decision, I will handle the enrollment process from A to Z.