Self-Funded Insurance – The Ins, The Outs and Everything In Between
Have you ever considered offering your employees health benefits through a self-funded plan? There are several upsides to creating and running your own health insurance coverage. Let’s take a look at the possibilities and learn how you can successfully launch a self-funded health benefits plan equally as comparable to any traditional fully insured plan.
Is a self-funded plan for my company?
Self-funded plans may save a company money. However, with potential financial gain in cash flow comes a risk of unexpected health care costs. Employers are responsible for setting premium rates dependent on past health claims. Any claims higher than what was predicted is covered by stop loss insurance coverage. Conversely, the money saved from paying for claims lower than employers prepared for can go toward investments. All claims are paid for out-of-pocket and as needed by the employer using previously collected premiums. Other benefits:
- Certain tax exclusions
- More control over health insurance plan design
- Minimal, if any, administrative costs
- More cash
How does stop loss coverage work?
There are two types of stop loss coverage, they are:
Specific Stop Loss – This coverage is extremely beneficial for extraordinary medical expenses incurred by one employee. Employers set a specific deductible with their carrier for these unfortunate cases and when an individual exceeds that set deductible, the employer is reimbursed the overage cost.
Aggregate Stop Loss – When claims exceed the entire plan as a whole, this coverage is very protective. Similar to the Specific Stop Loss plan, carriers reimburse the employer once claims paid exceed the predetermined cap. The cap is dependent on health plan enrollment numbers and therefore, changes month to month.
BenefitMall can get you started with your own self-funded plan. Start by contacting us today and we will help educate you and your employees, and prepare and execute your self-funded plan.