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Self Funding
Many employers have evaluated the ever-increasing costs associated with group medical, dental, vision,
or disability plans and have sought ways to improve cash flow without increasing their risk.
Self-funding is an arrangement whereby an employer can select the maximum amount of risk they wish to
 assume
and purchase stop loss insurance for amounts above that risk.
By incorporating a "high-deductible," i.e. $5,000 or higher, a partially self-funded plan utilizes
"insurance" in its truest form. The employer self-funds the smaller incidental claims while the insurance
carrier incurs the larger, unpredictable losses.
Employers have proven to themselves that by self-funding the smaller, predictable claim and purchasing stop loss
insurance for the larger unpredictable claims, several advantages develop. You will:
- Have increased control over your cash flow.
- Be able to reduce many fully-insured charges.
- Have direct control of your benefit design.
- Not be required to pre-pay "estimated" costs, only "actual" costs.
- Have control of your claim reserve accumulations.
- Likely be exempt from state regulation because your plan is governed by ERISA.
- Control your plan costs through management of health, dental, and vision care dollars.
As you, the employer, are examining ways to improve cash flow, without sacrificing benefits, the advantages of self-funding
increases. Rather than investing dollars in traditional insurance premiums, funds can be retained by you to build plan assets.
Benefit Networks has established many self-funded plans over the years for many clients. We believe partial, self-funding
should be seriously considered as a benefits solution. As you, the employer, continue to hire new employees or receive rate increases
on your fully insured plan, self-funding becomes and even more attractive alternative.
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