Self Funded Insurance Explained: Your Guide to Level Funded Plans

Choosing the right insurance plan for your business can be overwhelming, but it doesn't have to be. At Grey Cardinal Insurance Group, we're here to guide you through your options, including self funded insurance. This approach has become an appealing choice for small and mid-sized businesses eager to manage healthcare costs more effectively. Based in South Carolina's Lowcountry and extending into Georgia, we offer personalized solutions that bring big firm expertise to our clients.

What is Self Funded Insurance?

Self funded insurance is a health plan where employers take on the financial responsibility of providing healthcare benefits directly. Unlike traditional insurance where you pay a fixed premium to an insurer, with self funded plans, you pay for employee claims as they occur. This method provides greater control over costs and benefits, making it a popular choice for businesses of all sizes.

Here are some reasons why self funded insurance is gaining traction:

• Cost Management: Avoid high premiums of fully insured plans and potentially save money.
• Flexibility: Design benefit plans that truly meet your workforce's needs.
• Transparency: Direct access to claims data helps you understand and manage healthcare expenses better.

How Does Self Funded Insurance Work?

With self funded insurance, employers fund healthcare costs directly. Here's how it works:

• Funding the Plan: Set aside funds for expected healthcare claims in a dedicated account.
• Claims Payment: A third-party administrator (TPA) processes claims and pays them from your funds.
• Stop-Loss Insurance: Protects against unexpectedly high claims by covering costs beyond a certain point.
• Plan Design: Customize your health plans to suit your workforce's specific needs.

This approach offers control over healthcare costs and allows for tailored benefits. For instance, a tech company might prioritize mental health services, recognizing their importance in their industry.

Benefits of Self Funded Insurance

Self funded insurance offers several advantages:

• Cost Savings: Eliminate the extra costs insurers add to premiums.
• Flexibility: Tailor health plans to match your workforce's preferences.
• Transparency: Gain insights into spending, enabling informed decisions on plan design.
• Cash Flow Benefits: Improve cash flow by not paying premiums upfront.

As noted by Cigna Healthcare, self funded plans can offer small businesses a competitive edge with customized benefits at potentially lower costs.

Level Funded Insurance: A Hybrid Approach

Level funded insurance blends elements of self funded and fully insured plans. It's ideal for businesses seeking cost control with financial predictability.

What is Level Funded Insurance?

• Pay a fixed monthly amount covering expected claims, admin costs, and stop-loss insurance.
• Receive a refund if actual claims are lower than expected.
• Stop-loss insurance protects against excessive costs if claims exceed expectations.

This approach offers flexibility and potential savings of self funding, while providing the predictability of fully funded plans. It's a great way for businesses to transition towards full self funding.

Self-Funded vs. Fully Funded Insurance

Choosing between self funded and fully funded insurance involves understanding key differences:

Self Funded Insurance

• Employers bear the financial risk for healthcare benefits.
• Offers flexibility in plan design and potential cost savings.
• Requires a solid risk management strategy.

Fully Funded Insurance

• Insurance carriers assume financial risk, offering fixed premiums.
• Less flexibility in plan design.
• Businesses don't benefit from lower claims costs.

For more details, explore Self-Funded Insurance Plans 101. Ultimately, the right choice depends on your financial capacity, risk tolerance, and long-term goals. Consulting experts like Grey Cardinal Insurance Group can help tailor the best plan for your needs.

Considerations for Businesses

When considering self funded insurance, keep these factors in mind:

• Risk Management: Evaluate your ability to manage financial risk for employee health benefits.
• Company Size: Larger companies often manage self funded plans better, but smaller businesses can benefit too with predictable costs.
• Employee Demographics: A younger, healthier workforce may lead to lower claims.
• Financial Stability: Ensure you can cover potential high claims and unexpected costs.
• Administrative Capacity: Consider if your team can handle the administrative work or if you need a TPA.

These considerations will help determine if self funded insurance is right for your business. For personalized advice, reach out to Grey Cardinal Insurance Group.

Conclusion and Next Steps

Self funded insurance can be a flexible and cost-effective option for managing health benefits. Understanding its workings and advantages can help you make informed decisions that align with your business goals. To explore self funded insurance further, or learn about other solutions like employee benefits, contact Grey Cardinal Insurance Group. Our team is ready to provide tailored advice to find the best insurance solutions for your business.