Traditional Self-Funded Plans

Self-funded benefit plans give employers the ability to cut employee benefit costs and manage risk associated with high cost claims.

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Why a Self-funded Plan?

Self-funding prevents insurance companies from passing on the full costs of increasing healthcare prices by removing your group from the large insurance pool, thus potentially creating large cost savings.

Differences Between Traditional Fully Insurance Plans and Self-Funded Insurance Plans

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Advantages of Self-Funded Plans

Custom Plan Design

Because plans are custom designed, the employer doesn’t pay for coverage that isn’t relevant to their employee base, which increases benefit utilization. We collaborate with each employer to design benefit plans that address the unique health needs and risk factors for their employee base.

Control Plan Design and Benefits Offered 

You maintain control of the plan document, summary plan description and the schedule of benefits. You also have 24/7 access to all reports and plan details, enabling them to make decisions regarding all aspects of the plan.

Promote Culture of Investing in Employee’s Health

Ability to Build Claim Reserves

Any money that is not used in the current plan year can be rolled over into the next plan year. You can use reserves to pay for additional benefits for your employees or to pay for invoices.

Collection of health plan data 

You have access to data that is not made readily available to those who have a Fully-Insured plan.

Reduced premium tax and avoidance of health insurance industry tax

Self-Funded plans are not subject to the premium taxes that Fully-Insured plans have to pay.

Eliminates state mandates as Self-Funded plans are solely governed by ERISA

Stop-Loss Coverage

The employer is protected by stop-loss insurance in the event a specific claimant or the entire group’s healthcare claims exceed a certain level.

Disadvantages of Self-Funded Plans

  • Financial Risk – If there happens to be an employee with a large claim that is more than the claims reserve then you are responsible for the difference if the amount is still less than the stop-loss deductible amount.
  • Education – You must spend time educating your employees about how self-funded plans work as well as keep track of reports to follow how your plan is running.

Risk Mitigation Options for Self-Funded Plans

Stop-Loss Insurance

The employer is protected by stop-loss insurance in the event a specific claimant or the entire group’s healthcare claims exceed a certain level.

These combined methods empower the employer in managing current risk, mitigating potential risk, and focusing future cost management efforts in a targeted, meaningful way.

Specific Deductible

This covers the employer in the event that there is a high claim(s) for an individual. A deductible amount is chosen based on a level of risk for that employee and when the employees claims exceed that amount then the employer is reimbursed for the difference.

Aggregate Deductible

This covers the employer if the total claims for the plan exceed the aggregate limit, the stop-loss insurer covers the claims or reimburses the employer. The deductible or attachment for aggregate stop-loss insurance is calculated based on several factors including an estimated value of claims per month, the number of enrolled employees, and stop-loss attachment multiplier which is usually around 125% of anticipated claims.

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How a Third Party Benefits Administrator Makes Self-Funded Plans Easy

The employer may handle administration in-house, however, majority hire a third party administrator (TPA) or work with an insurance carrier on an ASO basis.

When an employer works with a third-party administrator (TPA), self-funded plan management and compliance is an easy process. The TPA does the heavy lifting for the employer, from plan design, to processing of claims, to customer service, to maintaining compliance with federal and state laws. The TPA also helps the employer effectively manage the cost of healthcare by providing transparency about the cost of claims, the key cost drivers, and solutions for reducing the costliest claims.

How BMA Excels at Self-Funded Plan Management

BMA provides efficient claims management services achieved through superior processing accuracy and claim turnaround services. We work with a variety of self-funded medical benefit plans including Health Reimbursement Arrangements (HRA), PPO plans, HMO plans and Medical Reimbursement plans. Our tailored administration services provide our clients with flexibility and control.

Advantages of BMA Self-Funded Plans

Unique Plan Design per Your Business Needs
Choice of Provider Networks & Vendors
Stop-Loss Coverage
Cost Containment Features
Disease and Case Management
Employee Engagement and Wellness Programs
Detailed Reporting
COBRA Administration

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Let's talk about how self-funded benefit plans can meet the needs of your business and your employees.

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