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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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Erin Woulfe

Erin Woulfe

Erin Woulfe likes to write about things that matter. Keeping her finger on the pulse of what’s happening in the public sector world, she blogs about the latest legislative news and employee benefit trends that affect our school, city and county clients. She’s been with NIS since 2002. “I love connecting to our clients and providing them with the tools they need in order to administrate their plan,” says Erin. “Whether that be materials to educate their employees on certain benefits, how to effectively communicate change within an organization, or providing tips and how-to’s to help them make their job easier.”