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Related Links: Funding Terminology

Self-insurance (or self-funding as it is widely known) is an alternative risk financing strategy for providing health care benefits to employees. Self-funded plans pay the claims for each employee (up to a tolerable limit) as they are incurred instead of paying a fixed premium to an insurance carrier, which is known as a fully-insured plan. An employer purchases reinsurance to reimburse them for claims above a specified dollar level (also known as stop-loss insurance). There are several advantages of such a plan including the elimination of a fully-insured arrangement's profit margin.

Though self-funding is an increasingly attractive option to employers in controlling their rising costs of health coverage, it is not the best option for every employer. Mattecheck & Associates, Inc. works with their clients to choose the funding avenue that fits their needs, finances and structure.

Many plan design options are available to employers to provide health coverage:

Fully Insured

1. Fixed monthly premium
2. Insurance company responsible for liability
3. Insurance company handles all paperwork
4. Employer has no risk exposure
5. State Premium Tax Applies
6. State mandates supersede Federal ERISA laws

Partially Self Funded

1. Employer funds the claims
2. Employer liability limited by Excess-Loss Insurance
3. Fixed monthly fees
4. Employer liable for all claims
5. State Premium Tax only on insured products
6. Federal ERISA Laws supersede state mandates
7. Employer holds own reserve

Minimum Premium

1. Fixed monthly expense
2. Insurance company responsible for liability
3. Insurance company handles all paperwork
4. Employer has no risk
5. Reserves held by insurance company or employer
6. State Premium Tax Applies
7. State Mandates supercede federal ERISA laws

True ASO

1. Administration Services Only
2. Fixed Monthly Fee
3. Employer liable for all claims
4. State Premium Tax applies only on insured products
5. Federal ERISA laws supersede state mandates