Self Funded Plans
Self funded plans are now available to small businesses. The primary benefit for the small business owner is that, in years when employee claims are low. The business can re-coup a percentage of the premium costs of the group. Even a business as small as ten people can potentially receive a refund of ten or even twenty thousand dollars at years end.
Self funded plans have been available to large employers for decades, in recent years more and more Major Carries are offering a self funded option to small businesses.
Functionally, the premiums paid are divided and applied toward three separate sections or "pools." These pools include:
Self Funded Account
Stop Loss Insurance
The insurance carrier handles all three components for your business. Benefits management is self explanatory for most. The amount that goes into your self funded account is used to pay medical facilities for employee claims that exceed their deductible in a given year.
The stop loss insurance is to pay for any additional amount that needs to be paid to medical facilities or doctors that exceeds the amount allocated to your self funded account.
This type of insurance protects your business completely with the stop loss feature. It also gives you the opportunity to get a partial refund on your premiums paid during years when employee claims are low. This allows you to use that capital to reinvest in your business. Underwriting questionnaire's must be completed by your participating employees to finalize pricing during the quotation stage.
There is also a plan option available called "reference based pricing" that can save your business even more.