Surviving ACA: Self Funding Advantages


This blog series is a supplement to our webinar on Tuesday, September 1.  If you would like to register for our free webinar, please click here.  In addition, you can get more in depth information by contacting the webinar presenter, Brenda Basso who is one of our AUI experts.

A self-funded group health plan is one in which the employer eliminates obligations to a health plan provider by assuming the financial risk for providing health care benefits directly to its employees.  While experienced, successful business managers are experts at mitigating risks, many will gladly take on risk exposure if the probability is good for a high payout.  There are numerous well-documented advantages to self-funding for employers that manage risk well including:


  • Reduced insurance overhead costs.  Carriers assess a risk charge for insured policies (approximately 2 percent annually), but self-insurance removes this charge.


  • Reduced state premium taxes.  Self-insured programs, unlike insured policies, are not subject to state premium taxes.  The premium tax savings is about 2 to 3 percent of the premium dollar value.


  • Avoidance of state-mandated benefits.  Self-insured plans are exempt from state insurance laws, subject only to ERISA compliance.


  • Choosing benefits services a la carte


  • Flexibility in plan designs, administration and offered services


  • Customizable stop-loss insurance to reduce risk associated with high claims


  • Improved cash flow.  Self-insured employers do not have to pre-pay for coverage, and claims are paid as they become due.


  • Additional cash flow if reserves are held in an interest-bearing account


AUI specializes in helping employers understand the value of a self-funded plan and helps employers determine if self-funding is the right fit for their business.  If you would like more information, please contact one of our self-funding experts by clicking here.

We do more than cover small businesses and individuals with the right insurance policies and benefit plans – what motivates our team is helping you save more so you can invest more in your team, family, and goals.

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