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Why School, City, and County Employers are Moving to Self-Funded Health Insurance Plans

Moving to self-funding is an ACA strategy that many schools and local governmental employers are embracing in order to save money and control costs. When using a self-funded plan, employers assume the liability and risk associated with uncertain healthcare costs in exchange for a number of significant financial benefits. To protect against unpredictable or above-average claims, the organization purchases stop-loss coverage as a way to limit risk. The stop-loss provider pays any claims higher than that pre-set amount.

Here are four key advantages for self-funding:

  1. Plan Design Freedom: Utilization reports can help you create a multi-year benefits strategy plan that can be customized, adjusted and changed in endless ways.
  2. Tax Savings: In certain states, there are no premium taxes on self-funded plans. You can also save on ACA taxes and fees including Medical Loss Ratio Rules, Annual Insurance Fees, Reinsurance Fees for 2015-16 and Insurance Premium Reductions.
  3. Lower Administrative Costs: Self-funded plans administered through a third party administrator are usually less expensive than through the insurance carrier.
  4. Better Cash Flow: Funds are only required when claims are paid. This allows your organization – instead of the insurance company – to earn interest on the reserve. Also utilization reports can help forecast claims and insurance costs for next year, allowing for better cash flow.

For more information, watch our video.

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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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Valerie Ortiz

Valerie Ortiz

Over the past 15+ years, Valerie Ortiz has worn many hats at National Insurance Services. She currently heads up NIS’ Marketing Team where she helps to create and execute employee benefit communications based upon our public sector clients’ needs. Valerie brings order to the chaos and has a zeal for detail and a talent for organization.