Self-Funded Health Plans

One way that human resource departments and company benefits managers have sought after to gain control over health premium expenditures and vendor fees. A self-funded healthcare plan is one alternative that can allow organizations to reduce and manage health care insurance costs and improve cash flow while still delivering the health coverage workforces demand.

In a self-funded health plan employers take on the financial risk of funding health plans and become responsible for managing and administering them. Governed by the Employer Retirement Income Security Act (ERISA) and appealing to employers because of greatly flexibility, self-funded health plans are able to be custom tailored and have fewer state-mandated features than other options.

What are the basics of a Self-Funded Health Plan?

Employers assume health plan liability and risk in exchange for more significant control over the plan’s administration and funding levels. How is this different from a traditional, fully insured plan? When the insurance company assumes the risk, as they do in traditional plans, they also control the plan administration, establish reserve capital levels and manage other major decisions concerning the coverage. However, when a company has a self-funded health plan, it can purchase excess insurance coverage to protect itself from extreme claims and utilization. Otherwise known as Employer Stop-Loss (ESL) coverage, it provides protection  for the entire covered group, reimbursement over specified expense amounts, and cover catastrophic and excessive claims such as organ transplants or extended hospitalizations.

In the past two years of detailed claim history were needed to switch to a self-funded health plan option, but with technology and the development of new analytical capabilities used to quote fully insured cases, more employers are able to receive quotes without the detailed history. Comparative scenario modeling is used to carefully evaluate the cost differential between fully-insured and self-funded health care plans.

At Nevada West Business Insurance our knowledgeable, expert analysis of your company will be used to create a custom tailored set of options for your group health care  and employee benefits program.

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