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Self Funding Group Health Plans

In addition to the risk management approach of fully insuring group insurance plans, whereby employers pay fixed premium regardless of claim activity, self-insurance can provide an alternative vehicle to providing employee benefits.

Although traditionally an approach used mainly by mid and large-sized firms, self-funding group health plans can provide a viable option for smaller employers as well. Determining the appropriate funding method is critical to optimizing the value of an employer's benefits program. Potential advantages of self-funding varies across employers, but primary examples are provided to the right.

However, self-funding group health programs is not a fit for all employers. The main disadvantage of self-insurance is the financial risk of paying claims and the accompanying risk management challenges. The financial risks are driven by the unpredictability of claims over time.

For more than 25 years, Grooms Benefit Solutions has provided expert consult on developing and managing self-funded group health plans. We can provide employers with a detailed assessment to determine if this is the best approach to fund an employer's group health program.

If your firm has not considered self-funding in the past, now is the time to explore an alternative funding solution.

 

Can we help you explore self-funding?

Lower administrative costs
Self-funded plans generally have less administrative and retention fees compared to fully insured plans.

Improved trend management
With access to utilization and claims data, employers can evaluate health care costs and implement cost containment measures.

Avoid state-mandated benefits
These plans are governed only by federal law ERISA, not by individual states, and you decide which benefits to include in your plan.

Plan design flexibility
In addition to offering the same benefits to employees in all states, TPAs and carriers allow for increased plan design customization.

Reduce taxes
Because only governed by ERISA, not by state regulations, you only pay tax on the stop-loss premium.  In addition, these programs are subject to fewer PPACA taxes.

Stop loss coverage
Set maximum monthly costs to protect you from catastrophic claim situations.

Improved cash flow
By keeping funds in-house until needed for claim payments, employers see improved cash flow.