Self-Insured Health Plans
Employer-sponsored health insurance coverage for employees and dependents.What is Self-Funding?
Self-funding is an arrangement where employer provides direct reimbursement for health benefits, with business funds—generally combined with stop-loss protection that protects against catastrophic health expenses.
Pros
Can yield significant savings with healthy workforce
Custom, flexible plan design
- Allows for innovation
Direct control over medical inflation
Elimination of premium tax
Gain wellness plan ROI
Enhanced data and reporting
Cons
New strategies come with some inherent risk
Product marketplace not tightly regulated
- Important to work with reliable, proven Stop-Loss carrier
Requires diligent financial planning
Large claim liability
Legal and financial responsibilities fall on
the employer
Requires greater employer involvement
Types of Self-Funding: Risk vs. Reward
Self-Funded Health Plans
Greatest Risk: Employer retains all control and risk exposure
Employer as Payor & Plan Sponsor
Self-Insurance
Level Funded Premiums
Self-Insurance
Benefit Captive or Reinsurance Purchasing Co-Op
Self-Insurance
Graded funding with specific Stop-loss and Aggregate Stop-Loss Reinsurance
Employer as Payor & Plan Sponsor
ASO with Aggregate Stop-loss Reinsurance only
Self-Insurance
Pure Self-Funding—ASO only
Fully-Insured Health Plans
Least Risk: 100% risk from employer to external
Employer as Funds Facilitator
Fully-Insured
Group Health Plans
Employer as Plan Selector & Designer
Fully-Insured with HRA
Fully Insured High Deductible Plan with Health Reimbursement Arrangement
Level-Funded Plans
Pay a steady amount each month, similar to fully-insured health plans
- Determined by TPA or Carrier
- Includes Stop-Loss Insurance
- “Pools” the premiums, claims paid with this money
- Remaining funds in the “pool” may be returned to the employer
Offers predictable, set cost like fully-insured plans with the benefits of a self- insured health plan
Least risk of all Self-Funded plan structures
Benefits
Acts and feels like a fully-insured plan
Renewal costs solely determined by your company’s health care costs
Retain some (or all) of claims surplus
No State Premium Tax and excluded from 2 of 3 ACA fees
Generally less expensive than fully-Insured plans
Increased flexibility and customization of insurance plan design
What is Captive Insurance?
Captive insurance is similar to an “in-house” benefits plan and is set up as a wholly-owned subsidiary for companies. It is designed to cover assets and company risks.
Medical Captive Insurance Plans
Single Parent Plans
Large employer with existing captive or that is currently self-insured
- Complete control over plan
- Built for large amount of plan participants
- Requires wide range of participants to assign risk and benchmark costs
Group Member Plans
Member groups without an existing captive
- Built for small to mid-sized groups
- Member-owners gain financial leverage withstop-loss coverage