Advantages of Self Funding

Employers discover the following advantages of self funding their health insurance coverage:

• Elimination of premium tax.
• Lower cost of operation - administrative costs of a professional TPA are significantly lower.
• Carrier profit margin and risk charges eliminated.
• More effective claims processing - TPA's offer controlled and accurate claims processing for each employer.
• Effective cost and utilization controls - TPA's can offer resources unavailable through a traditional carrier, such as a hospital bill audit program.
• Cash flow benefit - the employer's cash flow is improved, due to lower premium costs and the retention of reserve funds.
• Return on investment - Interest on reserves remains under the employer's control.
• Control of plan design - flexibility in plan design and features, and the ability to redesign the plan to eliminate plan abuses.
• Mandatory benefits avoided - State regulations mandating benefits are avoidable under fully self-funded plans.
• Stop Loss flexibility - the employer may choose the amount of risk to retain and the amount covered by the stop loss coverage, affecting the actual cost of the plan.
• Employers with good claims experience do not wind up subsidizing those with bad experience.

Self Funding > Advantages of Self Funding