What Is Self-Funding

About Self-funding

When an employer sponsors a self-funded health benefit plan and maintains stop-loss insurance, the employer is financially responsible for employee covered claims up to a certain dollar amount.




The employer’s stop-loss insurance policy then covers the remaining cost of covered claims, providing protection for the employer. There are two ways stop-loss insurance protects employers from large, unexpected or catastrophic claims:
  • Aggregate stop-loss insurance reimburses employers for covered claims over a certain amount for the entire group
  • Specific stop-loss insurance reimburses employers for covered claims over a certain amount for an individual
Because self-funding claim dollars are not subject to state health insurance premium taxes, employers can get direct savings. Additionally, if an employer has lower than expected claim costs throughout the plan year, there may be an opportunity to receive a refund.

A stop-loss insurance contract allows employers to be rated by their stop-loss carrier based on their own risk profile* versus being rated on a block of business, which can provide overall plan cost savings. With a wide range of flexible plan design options, including higher deductibles, and different coinsurance choices, self-funded benefit plans can be customized to meet an employer’s needs and budget. They also have the advantage of claim utilization reports, which include important information such as a summary of where claim dollars are being spent, or claim payments by type of service. These reports provide detailed information on how their self-funded health benefit plan is running, help identify how their claim dollars are being used, where there are potential cost-savings changes; and provide insight to forecast future plan design changes to better meet the needs of their employees.

For more information about self-funding please read the Self-Funding Overview Brochure.

* This does not apply to states with community rating for stop-loss insurance.  

 


 
Self-funding with Starmark has many advantages, including:
 
  • Flexible plan designs that are similar to fully insured plans
  • Set monthly payments
  • The opportunity for a refund
  • Stop-loss protection
  • Long-term savings
  • Savings on state premium taxes
  • Claim activity reporting
Contact us today for more information.