What is Self-Insured Health Plans?
In a self-insured health plan, the employer assumes the risk and responsibility of medical claims instead of contracting with an insurance carrier to pay claims. The employer sets premium rates based on claims history and typically benefits from lower administration costs and greater flexibility both in plan design and cash flow within the business.
A self-funded plan may contract with a third party administrator (TPA), but it is still a self-funded plan because the
company is responsible for funding the claims payments. Stop-loss insurance can be obtained to pay for excessively high claims, but the employer is responsible for the majority of the costs and the stop-loss insurance is simply a protection against extremely high, unpredictable claims.
Self-funded plans are not right for every company. One of the downsides to a self-funded plan is that the employer must pay out claims as they come in, leaving itself exposed to fluctuating expenses. Level funding is an option that can add predictability back into the equation if your company decides to implement a self-funded plan.
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