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Self-Funding Overview |
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| Self-Funding is a financial mechanism for funding employee benefit plans in which
the employer takes a portion of the claim risk. This differs from a
traditional-fully insured plan where claims are paid by the insurance carrier
from premium dollars. Typically, the employer is protected from large
claims by purchasing reinsurance. |
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The
Advantages of Self-Funding |
- Plan can be tailored to
meet the needs of your group.
- Smooth transition from
fully insured.
- Lower fixed costs than
fully-insured plan.
- Regulated at the federal
level by ERISA, most of these plans are not subject to mandated state
benefits.
- Cash flow
flexibility.
- Carrier changes at
renewal not apparent to employees.
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