THE ADVANTAGES OF SELF-FUNDING

In today’s business climate, managers need benefits solutions as resourceful and cutting-edge as the organizations they run. For many employers, pre-packaged full insurance health plans do not provide the greatest value to their organizations. Employers of all sizes are looking to mold their plans around the requirements of their businesses.

There are many reasons employers might avoid a traditional plan system. Small and mid-sized employers might want to avoid risk charges and state premium taxes. Large employers may want to administer their benefits plans themselves and grow their cash flow by holding their reserves in an interest-bearing account. Multi-state employers might want to free themselves from the burden of complying with the insurance regulations of multiple states. Employers ofyoung, healthy workforces may be looking to save on health insurance.

Because each business is unique and requires its own set of insurance solutions, diversity in provided benefits plans is needed. For many employers, it may be far more beneficial to pursue self-funding as a benefits solution.

A self-funded group health plan is one in which the employer eliminates obligations to a health plan provider by assuming the financial risk for providing health care benefits directly to its employees. While experienced, successful business managers are experts at mitigating risks, many will gladly take on risk exposure if the probability is good for a high payout.

There are numerous well-documented advantages to self-funding for employers that manage risk well.

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