FREQUENTLY ASKED QUESTIONS ON SELF-FUNDED PLANS

What is a fully insured health plan?
What is a self-funded health plan?
Why do employers self fund their health plans?
With what laws must the self-funded plan comply?
Is self-funding for everybody?
What is excess-risk (or Stop-Loss) coverage?
Do I have to redesign my existing health plan?
What about payroll deductions?
Will my life insurance coverages be affected by self-funding my health plan?
Who will take the place of the insurance company to administer the plan?
What are the advantages in using a TPA?
Do TPAs do as good a job, or a better job, than insurance companies??
Why should I self-fund my health plan?

Who will take the place of the insurance company to administer the plan?

A large self-funded employer can either administer the plan himself or have a third-party administrator (TPA) administer the plan. TPAs are specialized administration companies that have come into being because of the growth in the self-funding industry over the past 30 years. TPAs administer billions of dollars of self-funded health claims - a figure that's growing every year. Only very, very large employers have the resources to self-administer. Many employers feel that insurance companies won't offer the personalized service they prefer. This leaves TPAs as the preferred choice by most self-funded employers.

Other employers find that the existing plan is excessively expensive because of an overly generous design and/or difficult administrative burdens. Employers redesign these plans to save money and to simplify the plan. The choice is up to the employer. We'd be glad to help with this decision.

Return to Top