An alternative way to finance the healthcare plans for your company.
Basics of Self-Funding
Self-funded plan designs may differ from carrier to carrier, but the following provides a general idea of how these types of plans work.
- Employer makes one monthly payment of a set amount each month, which typically is comprised of three components: aggregate stop-loss premium (all of the claims exceeding a specific dollar limit) and specific stop-loss premium (a single catastrophic claim that exceeds a dollar limit), administrative expenses and aggregate claim liability account (also known as a claim pre-fund account).
- All covered claims are paid out of the claim pre-fund account.
- At the end of the plan year, if covered claims are less than what the employer funded, the employer receives a refund of unused claim liability.
- If the covered claims are more than what was funded, the stop-loss insurance pays the balance. This means your client is protected from large, unexpected claims from the entire group or even one individual.