Employee Benefits


The Advantages of Self-Funding Your Health Insurance Plan

Posted by Mick Rodgers

As a benefits professional working in the National marketplace, I am always amazed when I come home to my home state of Massachusetts (a state that prides themselves as leaders in Healthcare Reform) that many more local clients do not take advantage of a partially self funded healthcare program.  And while Massachusetts may have led the country as Healthcare  Marketplace Reformers, I notice that we have fallen way behind in the way we purchase of our healthcare programs.  Much of the country lead us and is not just sitting back and buying the same old fully insured plans that we have grown comfortable with excepting 10-15% renewals as a "trend increase" to just grin and accept it or further water down the program to lower costs.

As part of a multi-part series here, we though it would be helpful to put out a few pieces on the process, benefits, flexibility and savings opportunities for companies that are considering healthcare programs other that fully insured.  This is our first piece "the advantage of self-funding your health insurance plan".  

Importance of claims analysis

There are many reasons employers might eschew 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 of young, healthy workforces may be looking to capitalize on their advantages by saving on health insurance.

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