There is a type of insurance where an employer accepts the financial risk associated with providing healthcare benefits for their employees. It is known as self-insurance or self-funding insurance. This is different from health insurance plans that are traditional. With self-funded health plans, the dictates of an insurance company are removed.
Self-Funded Insurance Process
It’s time to look at a new way of funding your health care benefits.
An employer who decides to provide their employees with self-funded healthcare benefits will need to set up a special trust fund. It will be used to pay healthcare claims. A third party administrator (TPA) will need to be involved. The TPA will be responsible for processing the claims for the self-funded company. Many TPAs provide additional services. This could include claims reviews, dealing with PPO services, as well as collecting premiums and more. Many TPAs provide the services associated with having a healthcare benefit plan. Claims from a self-funded business can be completed within the company or subcontracted to a TPA.
One of the main concerns for companies who want to provide self-funded healthcare benefits is catastrophic claims. It is possible for self-funded employers to not experience financial distress and protect themselves against big claims. Large companies often have sufficient financing to handle their employee’s healthcare costs. Smaller companies may struggle to have a sufficient monetary reserves to cover them. In this case, smaller companies often purchase stop-loss insurance. This type of policy will reimburse an employer should healthcare claims be more than a predetermined dollar amount.
Self-funding employers often save money when they utilize the services of TPAs. An attractive benefit of TPAs is how they will manage a self-funded plan based on the employer’s specifications. It is not done to an insurance company’s policy. Money savings are experienced by individualized health plan management. There is no need to pay for discounts or an insurance company’s marketing schemes. It is a way for employers to provide only what is necessary based on their individual company needs.
Increased Cash Flow
One of the most attractive aspects of self-funded healthcare is improved cash flow. An employer does not have to pre-pay for possible claims using monthly premiums. A self-funded program provides a company with increased flexibility. It requires employers to only pay claims for the services that are provided. This results in more of an ability to control cash flow. It has often led to an increased chance of higher savings.
When it comes to health insurance policies for companies, there is not one policy that meets every situation. Each business has unique needs specific to how it operates. These needs should be met in ways that best suits an individual business. Offering employees a self-funded plan makes it possible to have the flexibility necessary to control health insurance terms. Self-funded programs can custom design to meet the needs of a company’s individual situation. This makes it possible to find solutions to health insurance problems and adjust them as needed.
Reduced Premium Savings
When a company self-funds its health insurance, they aren’t required to pay premium taxes to the state. This could be a savings of as much as three percent of the cost of monthly premiums. A self-funded policy involves only collecting premiums on excess loss coverage. This is only a fraction of the traditional insurance premiums. When a company is self-funding, the excess loss coverage premiums they pay are significantly less. The companies are also free from paying other types of common insurance charges like retention, risk charges and more.
Small and large companies who want to have self funded health plans can experience a number of advantages over having a traditional insurance plan. This could involve flexibility, money-savings and more. Before employers in Savannah, Ga pursue self-funding insurance, it is important they learn all the requirements that could apply to their individual situation. Contact Savannah Business Group today for more information!
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