What is Self-Funding?
- What is Partial Self- Funding?
Typically, only the largest companies can afford the risk associated with 100 percent self-funding. When most companies consider self-funding, they are actually dealing with partial self-funding. Partial self-funding means a re-insurance or stop loss policy is purchased to limit the risk.
There are two distinct types of re-insurance policies:
- Specific Stop Loss reimburses the employer for catastrophic claims on any single individual or member paid in excess of a certain dollar amount
- Aggregate Stop Loss reimburses the employer when the total of all employees and dependent claims exceeds a certain dollar amount
- How does Partial Self Funding work?
An employer establishes an account for paying claims up to the pre-determined stop loss reinsurance amount. This account may be pre-funded or funded as claims are paid. The Third Party Administrator (TPA) pays the claims out of this account and works collaboratively with ConnectCare.
- What are the benefits of Partial Self-Funding through ConnectCare?
- Retention: The employer retains case reserves for further claims that are typically accumulated by insurance companies
- Elimination: Premium taxes payable to the state are eliminated
- Reduction: Costs of administration, commissions, claims processing and printing fees are reduced significantly
- Flexibility: The employer games flexibility and maintains control of the plan
Partial self-funding assists employers in providing cost-effective health care benefits. With increased cash retention, tax elimination, administrative cost reduction and better flexibility, self-funding allows the employer to manager employee health benefits while protecting the financial well-being of the organization.
