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:
- 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.
- Tax Savings: Some states don’t tax premiums on self-funded plans. You may also save on some ACA taxes and fees.
- Lower Administrative Costs: Having a third-party administrator administrate your self-funded plan is usually less expensive than going through the insurance carrier.
- 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