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The Four Advantages of Self-Funding

self-funded insurance

Many public sector organizations are making the move to self-funded health plans in search of more control and lower costs. Here are four advantages to self-funding:

  1. Plan Design Freedom: A self-funded plan can be adjusted, customized, or changed in endless ways, even in bargained environments. Utilization reports are useful to detect trends and help guide plan decision decisions. This will enable you to create a multi-year benefit strategy. Goal achievement is manageable, and savings increase.
  2. Tax Savings: Some states don’t tax premiums on self-funded plans. You may also save on some ACA taxes and fees.
  3. Lower Administrative Costs: Having a third-party administrator administrate your self-funded plan is usually less expensive than going through the insurance carrier.
  4. Better Cash Flow: In lieu of pre-paying for coverage, you pay out funds only when claims are paid.* This allows you to earn interest on the reserve, improving cash flow. Additionally, utilization reports will help forecast claims and insurance costs for the next year, allowing better cash flow and benefit planning.

*other than a monthly administration fee

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National Insurance Services is not a law firm and no opinion, suggestion, or recommendation of the firm or its employees shall constitute legal advice. Readers are advised to consult with their own attorney for a determination of their legal rights, responsibilities and liabilities, including the interpretation of any statute or regulation, or its application to the readers’ business activities.

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Bill Enright

Bill Enright

Bill Enright believes in bottom-line honesty while empowering his customers with the knowledge they need to feel confident in their decisions. He is a 30+ year veteran with employee benefits expertise from insurance carrier to benefits consultant. Bill has been published on the topic of healthcare reform and has served on advisory committees and insurance reform lobbying groups at the state and national level. As an Employee Benefit Consultant in the Midwest Region, Bill will be working with both public and private sector schools, cities, and counties in Wisconsin. He is a licensed insurance agent and is a Certified Patient Protection and Affordable Care Act Professional (National Association of Health Underwriters).