A self-funded employee benefit
plan has a number of advantages over a more traditional insured
plan. They include:
- The self-funded plan may be tailored
to fit the needs of the group.
- The self-funded plan has lower
fixed costs than a fully insured plan. Most expenses are
variable based on the actual claims.
- The self-funded employer may
use the independent, managed-care measures, such as
preferred provider organizations, pre-certification and
utilization review, that save the most money, rather
than simply those the carrier offers.
- Any leftover funds in the
claim account may be reconciled against future
contributions.
- Interest earned on
the claim account is considered income to a non-qualified
plan. A qualified plan may use this interest for future
benefit payment.
- Benefit plan administration
through a professional third-party administrator is reasonably
and competitively priced. Only slightly more involvement
by the employer is required, such as verifying eligibility,
printing employee communication materials, and distributing
claim check.
- Self-funding with stop-loss
coverage simplifies budgeting because the employer
always knows its maximum expenditure for group health
coverage.
- Administrative services such
as claims handling are often simpler, faster and
performed on a more personal and professional basis.
Bureaucratic red tape is eliminated.
Compare
partial vs. fully funded plans — which is right for you?
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