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» Self Funding

Self Funding

Employee with self funding options vectorWhen your business is offering healthcare to your employees, there are a few options beyond the traditional health insurance model that may be worth considering. One alternative arrangement that may be beneficial to your company is a self-funding model.

What Is Self Funding?

With a self-funding insurance model, your business will pay your employees’ claims out of pocket instead of paying a full set premium. Although it may sound risky on the surface, your business will continue to partner with carriers, who will set a maximum limit per employee and pay for additional claims exceeding that amount.

Employers typically create a trust fund that will pay out for the claims. A self-funded employer can choose to administer their claims in house or subcontract the service out to a third-party administrator.

Who Should Consider A Self Funded Insurance Model?

Self-funding has a lot of benefits, but that does not mean it is suited to all businesses. It should be thought of as a long-term strategy that can be used by employers who would like to know where their healthcare dollars are going and who wish to keep the extra funds that are not spent on healthcare claims.

Self-funding insurance models need a consistent cash flow to pay employee claims, so this is not a good choice for employers who lack a steady and predictable amount of financial resources.

Benefits of Self Funding

There are several important benefits that your company may enjoy with a self-funding model. Here is a look at a few of the key advantages.

Prescription Customization

Nurses with prescription bottle vectorWith a self funded insurance model, prescription benefit managers can help your company to find areas where costs can be contained in terms of prescription usage.

The plan’s administrators can help your business to find new opportunities to keep prescription costs under control, even as more specialty drugs enter the market and usage rates rise. This often works out to be cheaper than a one-size-fits-all insurance policy.

Price Transparency

Companies that use fully insured arrangements with fixed costs may not end up knowing how their actual claims stack up against the premiums paid. With self-funding models, however, your business will have complete transparency into each claim that is filed so the costs can be actively managed to find greater savings.

Improved Cash Flow

One of the biggest reasons many employers choose a self-funded model is improved cash flow. There is no need to prepay for potential claims via monthly premiums, and it is even possible to end up with extra savings should your employees make relatively few claims throughout the year.

Level Funding

Employee looking at funding options vectorLevel funding is a type of partially self-funded plan that combines the cost savings and opportunities for customization of a self-funding plan with the financial safety and greater predictability offered by fully funded plans. The employer will still contract with an insurance company, but the insurer will take on a greater degree of financial risk.

Learn More About Self Funded Insurance

To learn more about self funded insurance and find out whether it could be a smart choice for your business, speak to the insurance consultants at New City Insurance. Please give us a call at 888.210.2759 or request a consultation online.

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Self Funding

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Google Rating
4.9
New City Insurance
New City Insurance
4.9
Mary Jane Deyette
Mary Jane Deyette
00:57 11 May 20
Jeff Stoltey is so awesome...even thru my company had only two employees, he took the time each year to research and find the best plan for us. The only reason I am leaving New City Insurance is because we no longer have any employees. Thank you Jeff
Tricia DeYoung
Tricia DeYoung
19:49 13 Feb 20
I was very thankful I inquired about this info. with Brendan. He was very helpful so I understand the benefits available much better now. Thank you Brendan.
Alma Ortiz
Alma Ortiz
22:25 23 Feb 20
Brendan was awesome! I couldn't figure out how to pick my plan and he returned my call on a weekend to help me. Outstansing service!
B Bayer
B Bayer
17:43 24 Sep 19
NCI handled almost everything from start to finish. Clayton and Brendan made the plans easy to understand and walked me through the application process. They got me my ID numbers before my cards arrived so that I could keep an appointment I had already scheduled. My last broker wouldn't have done that. 5 stars!
jessica kavanagh
jessica kavanagh
19:53 13 Feb 20
Brendan was so helpful I definitely recommend him if you’re in need of good help and getting it done promptly. Thankyou so much again.
Jessica Lehr
Jessica Lehr
03:36 07 Jun 19
Our staff was interested in a health plan, but we didn't know how beneficial a solid employee benefits package would be for our business to expand. We'd lose prospective employees because they had more options for their medical insurance which was sometimes more valuable than more pay. The New City team was amazing and gave us as many affordable options as possible so that everyone had their needs met.
T W
T W
22:32 30 Aug 20
I love New City Insurance. I never had a good experience dealing with insurance brokers until I started working with Brendan. He’s awesome! He is patient with me and takes the time to answer all my questions. I’m very grateful for all his help and hard work!
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