What it Means to “Self-Fund” Your Employee Benefits Plan (In 200 Words or Less)

By Tim Olson | April 10, 2017

What it Means to “Self-Fund” Your Employee Benefits Plan (In 200 Words or Less)

 

Employers with self-funded (or self-insured) plans retain the risk of paying for their employees’ health care themselves, either from a trust or directly from corporate funds.

Most employers with more than 200 employees (although it really does depend on the scenario) self-insure some or all of their employee health benefits. Many employers with fewer than 200 employees also choose to self-fund, but these employers require greater stop-loss insurance protection than larger employers.

The risk assumed in either situation is the chance that employees will become ill and require costly treatment. When employees have few claims and few expensive illnesses, the self-funded employer realizes an immediate positive impact on overall health care costs, hence why workplace wellness programs are crucial to the success of self-funded programs.

Conversely, if the employee group has unfavorable claims experience, a self-funded employer would incur an immediate expense beyond what may have been expected. Insured plans have a more predictable cost for the year; however, large employee claims costs from one year can affect future premium amounts.

Tim Olson

Tim Olson joined The Bailey Group in 2015. He works with businesses of all sizes to develop comprehensive benefits programs. He’s also passionate about wellness and helping companies create a culture of healthy living.

Tim Olson joined The Bailey Group in 2015. He works with businesses of all sizes to develop comprehensive benefits programs. He’s also passionate about wellness and helping companies create a culture of healthy living.

Get our latest posts delivered to your inbox weekly.

We promise to not throw any sales pitches your way, just great content sent to your email once per week.

Get our latest posts delivered to your inbox weekly.

We promise to not throw any sales pitches your way, just great content sent to your email once per week.

1200 Plantation Island Dr S #210 | St. Augustine, FL 32080 | Get Directions

© 2017 MFB Financial, Inc. dba The Bailey Group | All Rights Reserved. The information on our blog is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. Some policies may have exclusions and limitations. For costs and complete details of coverage, call or write the insurance agent. The amount of benefits and premium will vary depending upon the plan selected.

Mark F. Bailey, CLU®, Registered Representative offering securities through NYLIFE Securities LLC, Member FINRA/SIPC, A Licensed Insurance Agency. 7880 Gate Parkway, #200, Jacksonville, FL 32256; Phone: 904-997-3000 Mark F. Bailey, CLU® is an agent licensed to sell insurance through New York Life Insurance Company and may be licensed to sell insurance through various other independent unaffiliated insurance companies. The Bailey Group is independently owned and operated from NYLIFE Securities LLC and its affiliates.

The Bailey Group logo

1200 Plantation Island Dr S #210 | St. Augustine, FL 32080

© 2017 MFB Financial, Inc. dba The Bailey Group | All Rights Reserved. The information on our blog is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. Some policies may have exclusions and limitations. For costs and complete details of coverage, call or write the insurance agent. The amount of benefits and premium will vary depending upon the plan selected.

Mark F. Bailey, CLU®, Registered Representative offering securities through NYLIFE Securities LLC, Member FINRA/SIPC, A Licensed Insurance Agency. 7880 Gate Parkway, #200, Jacksonville, FL 32256; Phone: 904-997-3000 Mark F. Bailey, CLU® is an agent licensed to sell insurance through New York Life Insurance Company and may be licensed to sell insurance through various other independent unaffiliated insurance companies. The Bailey Group is independently owned and operated from NYLIFE Securities LLC and its affiliates.