What is Our Role?
What is Self-Insurance?
Self-Insurance (or self-funding) is an arrangement in which an employer
assumes some, or all, of the risk of the health plan. Instead of paying
premiums to an insurance company, the employer pays claims from its own
funds to cover the costs of their employees’ healthcare. These funds are
put into a trust, with payment taken out as needed to cover any applicable
plan expense. Unlike a fully-insured plan the extra profits from these
funds are kept to offset future claims, rather than being paid to the
insurance company.
What is a Third Party Administrator?
A third party administrator is usually an external professional firm
that pays claims and provides administrative services for self-insured
benefits plans. These services might entail Utilization Review, Employee
Assistance Programs, Workers’ Compensation, or HIPAA and COBRA administration,
along with others.
Why choose Self-Insurance?
Self-insurance gives an employer greater flexibility and control over
their health benefit plans, as well as opportunities for cost savings.
Self-insured companies can tailor their plans to a degree not available
through standard insured plans, creating opportunities to improve cash
flow, better contain costs, provide better benefits and meet the unique
needs of their employees.
Is Self-Funding appropriate for all companies?
The decision to self-fund employee health benefit programs depends on
many variables including, but not limited to, number of employees, amount
of risk the company is willing to assume and past claim history. Overall,
self-funding is a great alternative to the “one size fits all approach
to health care.” Companies choose to self fund in large part because they
want to provide a better offering of benefits to their employees. Self-funding
allows for companies to provide much better coverage than an HMO, thus
insuring a wise investment for all parties involved.