Why Self Funding?
Until recently, self funded plan designs with stop-loss insurance were primarily attractive to larger groups. But because of recent innovations and approaches, now smaller groups (10 or more) can take advantage of the savings these plans may offer while maintaining the financial protection against large claims. Self funding designs can provide employers with flexible plan alternatives that are similar to the traditional coverage that they may have today, but can offer lower costs with the opportunity for a refund of their maximum liability funding at the end of the contract period.
Most of the small group self funding designs being offered today are considered maximum funded plans (pre-funded), meaning the employer is funding their maximum liability on a monthly basis. And, with stop-loss insurance, employers are protected from the financial impact of big claims. Another key consideration that self-funded plans with stop-loss insurance provide is the transparency and opportunity to control costs through claims data and utilization reporting. The information you would have available can provide useful insight in determining cost-effective plan designs in subsequent contract periods.