Frequently Asked Questions

Q: What is the difference between a Self-Funded and a Fully-Insured Health Care Plan?

A: A Self-Funded insurance plan is an arrangement in which the employer assumes some or all of the risks of the health care plan, and pays claims directly from its own funds. Fully-Funded insurance plans require the employer to pay a pre-set premium to an insurance company, based on a projected claims amount. Regardless of the number of claims, the employer must pay the premium whether the insurance company pays $1 million or only $1.

Q: What are the benefits of being Self-Funded?

A: Companies that operate under Self-Funded benefit plans pay or fund claims only after they are actually incurred. In addition, a Self-Funded plan gives the employer more flexibility and control over their health benefits plan. Plans can be tailored to meet the specific needs of corporate employees, or designed to better contain costs.

Q: Is a Self-Funded insurance plan advantageous for all companies?

A: The answer is "no." In general, many variables affect employee health insurance rates, including: the number and location of employees, the general health of the employee population, past claims history, etc. It is important to consult a broker or benefits specialist before adopting Self-Funding as an alternative to your current plan.

Q: What is a Third Party Administrator?

A: A third party administrator (TPA) is an outside firm that acts on behalf of the employer by managing health care dollars, paying claims, and providing administrative assistance to Self-Funded companies.