In a self-insured plan, the company assumes the financial risk of providing healthcare benefits to its employees rather than paying premiums to an insurance company. This allows the company to have more control over the design of the plan and to potentially save money on premiums. A financial professional can provide valuable guidance and expertise in helping a company design and manage a self-insured medical plan that meets the needs of its employees while also maintaining financial stability.
1. The company pays an administer to adjudicate and pay its employees’ health claims.2. Insurance premiums are paid on a policy to limit company losses from large claims. The policies establish the claims liability maximums, above which the carrier pays any claims.a. The first type of policy is a “specific stop-loss” policy. This policy will pay claims that exceed some specified amount (e.g., $25,000) for any one claim.b. The second type of policy is an “aggregate stop-loss” policy, which limits combined risk for all claims under the policy.3. The company pays its employees’ actual claims, as limited by the stop-loss policies and Schedule of Benefits.
• Self-funding treats predictable claims cost as expenses rather that as insurable risk items.• Employers determine the amount of risk that is appropriate for their company.• Employers purchase stop loss insurance to protect against catastrophic claims.• Risk changes, insurance company reserves and most premium taxes are avoided.• Self-funded plans are governed by ERISA instead of each State insurance law.• A self-funded plan, the employer can either fund expense as it’s incurred or deposit the expected maximum cost into an account each month to build a reserve.• A Third-Party Administrator becomes your Claim Administrator to service your employees.• Lower costs, Greater Flexibility, Cost Management, Information Management, and 24/7 access to your plan.