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?

Is self-funding for everybody?

No. The major difference between an insured plan and a self-funded one is that in self-funding the employer assumes the risk for the claims and these claims should be somewhat predictable. Therefore, if the employer is very small, self-funding isn't recommended. Although there are companies as small as 25 employees that do successfully self-fund their health plans, an employer this size should consult us as to the viability of self-funding. Also, if the work force is volatile making future claims difficult to predict, self-funding may not be an option. Volatility of future claims can be smoothed out to a great extent by the purchase of excess-risk coverage, but here again please consult with us for more information.

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