The flexibility of a self-funded plan allows for more easily integrated cost-containment measures. A self funded plan also provides advantages from a cash flow standpoint in that it uses a pay-as-you-go approach. Self-funding gives employers the freedom to design benefit plans that meet the unique coverage needs of their group as well as their financial goals.
Benefits of Self-Funding
- Cash Flow Benefit: The employer's cash flow is improved when money formerly held by the insurance carrier in the form of reserves, for unreported and pending claims, is freed for use by the employer.
- Lower Cost of Administration: Employers find that administrative costs for a self-insured program administered through a TPA are significantly lower than those included in the premium by an insurance carrier or HMO.
- Control of Plan Design: The employer has complete flexibility in determining the appropriate plan design to meet the needs of the employer and employees. The employer can redesign its plan at any time.
- Claims/Administration: The TPA should provide fast, efficient claims service. The employer should be provided an electronic enrollment option.
- Customer Service: The employee should have access to a toll-free telephone number and a dedicated customer service team. Claims and eligibility information should be available over the Internet.
- Elimination of Most Premium Tax: There is no premium tax on the self-insured claim expenditures. Premium tax is applied only to the stop-loss premium, which is a fraction of a fully insured premium.
- National Provider Network: The TPA should offer a national integrated program of PPO networks for multi-state employers.
Mandatory Benefits are Optional: State regulations mandating costly benefits are optional because self-funding is regulated by federal legislation only.
- Cost Reporting: The TPA should provide a monthly detailed reporting of costs, by department or location, and by type of medical service. Utilization reports should also be available.
Self-funded plan administration including:
- Administration of medical, dental, vision, and disability claims
- ERISA compliance and 5500 filing
- COBRA and HIPAA administration
- Regional and National PPO network access
- Utilization Management
- Large Case Management
- Plan Design Management
- Disease State Management
- Wellness and Prevention
- Data reporting and analysis
- Subrogation recovery services
- Underwriting and reinsurance services