Self-Funded Plan Designs
Self-funded benefits allow employers to cover the actual cost of member claims as they occur, rather than pay a set premium to an insurance carrier for member benefits coverage. Typically, a Third Party Administrator (TPA) offers services to help the employer administer the plan. These include claims adjudication and payment on the employer’s behalf, customer service, medical management, network access and pharmacy benefits management.
Self-funding offers employers of all sizes many advantages, such as:
Financial and administrative control. Carrier premiums include plan administration and expected claims experience, but may conceal what goes on “behind the scenes.” A self-funded plan allows an employer administrative freedom and the ability to pay actual claims costs. Stop loss coverage helps protect the employer’s bottom line against catastrophic member illnesses. Premiums are eliminated and premium taxes only apply to stop loss premiums, providing significant savings.
Plan design flexibility. With a self-funded plan, an employer is open to build the plan with the vendors and services that meet member population needs. This includes medical benefits, cost management services and network strategies.
Personalized customer service. Many providers of self-funded plans, such as TPAs, can offer employers local, personalized customer support, rather than call-center assistance. Support often includes a client contact or team to help the employer monitor plan design and performance, and customer service to help members understand their benefits and claims.
Customized reporting. Since an employer takes control of administration with a self-funded plan, he or she requires a better understanding of plan performance. A full suite of reports can help with plan review and management.