The cost of health care in the United States has been steadily increasing, far out-pacing other business expenses. Indeed, the average employer health premium now costs more than twice what it did in 2001. Health care reform, including the Patient Protection and Affordable Care Act, has also added to the cost of employer plans. Many employers are faced with a difficult challenge—how to offer their employees quality health care, while managing the ever-increasing cost of coverage.
That’s where self-funding comes in. Also known as “self-insurance,” self-funded health care is an insurance arrangement where an employer provides health benefits to employees with its own funds. Traditionally, an employer would contract with an insurance company to cover employees and dependents. With self-funded insurance, employers pay for the claims of enrolled employees and covered dependents as they are incurred, instead of paying a fixed premium per employee, per month, to an insurance carrier.
Self-funded health plans often provide an employer more control over the design, administration, and funding of their plan, and typically offer equal to better health benefits at a lower cost than a fully-insured plan. With self-funding, employers can take control of both health care decisions, and their bottom line.
Benefits of Self-Funded Health Care:
- Flexibility & Control
- Lower Costs
- Comprehensive Data
- Wellness Focus