All of our member organizations self-fund their health benefits and utilize our provider network. But does everyone realize the many benefits that come along with self-funding? There are a lot of advantages but the five key benefits that we believe hold the highest rank are:
- Control. Employers have more control over their health benefit program.
- Increased Financial Control. Self-funding eliminates insurer profit margin and puts cost control in the employer’s hands rather than the insurance company’s.
- Lower Operating Costs. By funding claims directly, an employer avoids the costs of claim reserves, retention to cover the insurance company’s administrative costs, profit margin, risk charges, premium taxes and a contingency margin.
- Cost Management. Plan design flexibility and ongoing analysis of plan expenses allow self-funded employers to make the plan design changes needed to manage costs. Self-funded plan designs can include strategies to monitor utilization, steer care to discounted provider arrangements and assure appropriateness of care, all of which encourage wellness and provide incentives for wise utilization of care.
- Flexibility. Self-funding allows employers to design a health benefit plan to address specific employee needs, as well as company objectives. Self-funded plans are regulated by the federal Employee Retirement Income Security Act (ERISA), which exempts plans from state insurance laws that typically mandate certain benefits for insured plans and allows uniformity across state lines for multi-state employers.