Self-funding Group Insurance
Quality Coverage Controlled by You
A Self-Funded Group Health Insurance plan enables employers to maintain financial control over the health care benefits they provide to their employees. Rather than paying premiums to an insurance carrier, the employer maintains a special trust fund that earmarks employer and employee contributions to pay any medical claims incurred by employees. The employer, rather than the insurance carrier, keep the interest earned on premiums, which is a very helpful financial benefit.
Third-Party Administrators: a Helpful Alternative
A Self-Funded Group Health Plan can be far simpler to administrate than you realize. A third-party administrator, or TPA, is a designated party that can process and/or makes formal judgments concerning claims for employee benefit plans. A TPA can very well be an integral part of a self-funded group insurance plan. They can oversee and handle a multitude of administrative duties, including the collection of premiums, contracting for PPO services, claim reviews, and many other related activities that serve the employee benefit plan.
Advantages of Self-Funded Health Plans
Why do employers self-fund their health plans? While there are many reasons, these are the most often shared:
- Self-Funded plans can be customized by the employer to address the specific healthcare needs of its employees, so you’re not ‘stuck’ with a policy that is generic in its coverage.
- The employer controls the health plan reserves. This means interest income that would otherwise be earned by an insurance company via premium payment investment can be maximized as interest income for the employer.
- Employers avoid having to pre-pay for coverage, resulting in improved cash flow.
- Employer-funded plans are not subject to conflicting state health insurance regulations or benefit mandates. Self-insured plans are regulated by Federal law.
- Employers aren’t subjected to state health insurance premium taxes (2-3% of premium dollar value).
NOTE: a Self-Funded insurance plan does require a certain level of available cash flow. However, many companies with as few as 25 employees are enjoying the benefits of Self-Insured Health Insurance Plans. NAIM can provide support resources that will help you understand the feasibility of these innovative plans.
Allstate Benefits
NAIM is proud to include Allstate Benefits Solutions among the featured carriers within our network that offer Self-funded Health plans.
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