Self-funding your medical plan is different from fully insured plans. With fully insured medical plans employers’ contract with an insurance company to cover their employees and dependents. In self-funded medical plans the employer assumes the direct risk for payment of the claims for benefits.
With fully insured medical plans employers pay a set monthly premium for coverage which are set for 1 year. The monthly premium rates are based on the number of employees enrolled in the plan. The monthly premium will only change during the year if the number of enrolled employees changes. The insurer collects the monthly premiums and pays health care claims based on the benefits in the purchased policy.
Self-funded medical plans are different since employers only pay the incurred claims costs by enrolled employees and their dependents. Self-funding your medical plan gives employers control, flexibility and value. Employers receive a full refund if group’s claims are lower than the expected amount. Self-funding your health plan allows employers to provide employees with the benefits they need while protecting the employer from high claims.
As your self-funded benefit administrators Patterson Bryant will suggest best practice funding and procedures. Stop-loss insurance may also be arranged to limit employee’s loss to a specific amount. Patterson Bryant also implements Wellness Programs for self-funding plans. Wellness Programs provide a greater opportunity to cut costs by helping to improve the health of employees and their dependents to reduce the overall claims costs. Self-funding an employee benefit plan is a long term strategy to help employers achieve immediate savings and control costs.
Self-funding Advantages:
- Opportunity for future savings
- Stop-loss protection
- Attract and retain employees
- Lower administration costs
- Control of plan design
- Cost reporting
- Control over how money is spent
- Flexibility