As a third party administrator (TPA), self-funding is what we do best. But have you ever wondered if this option is right for you? Weighing the differences between a self-funded or a fully-insured health plan can be challenging. And what’s right for one employer’s strategy might not be right for another. To give you a head start on deciding whether self-funding is right for your business, we’ve put together some tips you can follow!
What is a self-funded plan?
With a self-funded plan, employers assume the financial risk associated with providing health care benefits to their employees. As an alternative to a traditional insurance program, it can provide employers with many benefits. Self-funded options from Meritain Health® allow you to design a plan that best serves your employees. Some advantages include:
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- Customized plan designs. You can build a versatile plan to include just the benefits you need.
- Control over plan design. You’re able to change your offering from year to year, to add or remove products and services.
- Lower cost of administration. You’ll pay for claims as your employees incur them, potentially lowering administrative costs.
- Reduced premium taxes. Self-funded claims don’t incur premium tax.
- Improved cash flow. With a pay-as-you-go system, cash flow isn’t tied up in claims that may occur.
Understanding the differences
So, what are the major differences between a self-funded plan and a traditional insurance program? One main difference is with self-funding, you get to design a tailored plan that works for you. Here’s a breakdown of how these options differ.
With a self-funded plan:
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- You’re able to customize and choose preferred vendors, products and services.
- You pay as claims are incurred.
- You can purchase stop loss coverage to protect against high-dollar claims.
- You can control costs by picking programs to fit your budget.
- You can choose a network option that suits your needs.
- You’ll be able to customize pharmacy benefits and clinical programs.
With a traditional, or fully-insured, program:
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- Your design options are prepackaged, with pre-selected vendors, products and services.
- You’ll pay fixed monthly premiums.
- Programs are often bundled into your package.
- Network choices, services and premiums are also bundled.
- It can be difficult to unbundle pharmacy benefits or manage them separately.
How do you know if self-funding is right for you?
Self-funded plans can offer advantages like customization, better control and bigger savings with your health insurance. But how do you know if a self-funded plan is right for you?
Start by asking yourself these questions:
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- Do you currently self-fund?
- Have you worked with a TPA before?
- Would you like to take a more active role in your benefit plan management?
- Do you want greater financial savings opportunities and control?
- Are you looking for greater flexibility in working with risk-managing point solutions?
- Are there specific network vendor partners or an external medical management vendor you want to work with?
- Will you need variable provider network coverage, or would you like to work with specific network vendors?
If you answered “yes” to more than one of these questions, a self-funded plan may be right for your company.
How can you get started with self-funding?
That part’s easy! If you’re considering a switch to self-funding, we can help you evaluate your options. Also, in case you’re wondering what your TPA handles, we can help you understand these responsibilities. At Meritain Health, we handle several functions, including claims processing, customer service, maintaining employee eligibility, utilization management, report generation, provider network access and implementing a pharmacy benefits program. We also provide employee materials, like enrollment materials, the summary plan description (SPD), ID cards and more.
If you’re ready to give self-funding a try, contact your Meritain Health representative so we can help you decide if a self-funded plan is right for your business.
This article is for informational purposes only and is not meant as medical advice.
