Why Choose Self-Funding? Employee benefit costs are a reasonably predictable business expense. Unlike traditional health insurance, self-funding allows you to only insure for the unexpected. After all, why insure a highly predictable "known" cost?
Self-funded group health plans have emerged as a leading strategy empowering employers to meet the challenges of increased regulations and rising health care costs. It is estimated that 57% of all health plans in the US are self-funded.* Self-insured plans increase employer options, control and stability enabling them to realize the full potential of their benefit dollars.
How Self-Funding Works – Benefit Plan Services provides ACA compliant plans with optimal flexibility, giving employers the ability to design health benefit plans that fit the needs of their group and align with company objectives. The health plans designed by BPS include a claim fund contribution, a plan administration fee and a stop-loss insurance premium.
Claim Fund Contributions are deposited into a bank account that is owned by the business. Medical claims incurred during the coverage period are paid out of the self-insured fund. Self-funding provides a unique savings opportunity in which the employer may utilize unused claim funds that can be applied to future medical benefits.
Plan Administration - BPS is a third-party administrator (TPA) specializing in claims management services for employers who self-fund their benefit plans. Plan management includes health plan design and implementation, claims administration, monthly reports and analysis as well as technical services. When covered employees incur medical expenses, BPS handles all claims related processing and makes payments for medical claims using money in the employer's claim fund.
Stop-loss Insurance Premium - Stop-loss coverage provides financial protection of the assets set aside for an employer's self-funded health benefit investment. Stop-loss coverage limits a self-funded plan's financial exposure from day one and provides coverage for the entire plan year, protecting against catastrophic claims and abnormal claim frequency.
Self-funded plans eliminate the traditional bloat of insurer profits, risk charges, inflation and claim reserves. This can amount to a substantial savings over fully-insured premiums. Employers can retain, invest and apply these savings directly to payment of medical claims.
Self-funded plans are exempt from state insurance laws. ERISA eliminates mandated benefits and reserve requirements that fully-insured plans are subject to.
With a self-funded plan, only the stop-loss insurance is subject to a state insurance premium tax. Traditional fully-insured plans are taxed on the total premium paid. Self-funded plans are also not subject to additional premium taxes that new ACA regulations allow states to impose on fully-insured plans.
BPS provides ACA compliant plans with optimal flexibility, giving employers the ability to design health benefits that fit the needs of their group and align with company objectives.
To the individual group member, a self-funded plan performs just like a traditional insurance plan. Self-funded plans also promote responsible behavior, as group members understand that reducing health care expenses optimize benefits and reduce collective costs for everyone in the group.
Stop-loss insurance protects the plan from day one if claims exceed the funded claims limit. Reform legislation has increased lifetime and annual plan limits, making stop-loss insurance an increasingly important safeguard to mitigate exposure.
If the claims fund balance exceeds total claims at the end of the plan year, the balance will be available for the employer to fund future medical benefit payments.