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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