Health Insurance: Self-Funded
Let’s be honest… California Health Insurance is expensive. No one would argue that. The traditional PPO health insurance plan has a deductible, co-insurance, and out-of-pocket maximum. In most cases the employer pays the premium (or a portion of the premium) and the employee pays the deductible and other costs. This scenario works nicely for many employers but some are looking for different options. They would like to save money as well as the opportunity to customize their plan. For these employers, a self-funded plan might be what they’re looking for.
A self-funded insurance plan is set up differently than the traditional plan. The employer typically pays the employees’ medical claims through a trust fund set up for this purpose. They also need to purchase two types of insurance; specific coverage and aggregate coverage. Specific coverage sets a deductible amount for every employee and aggregate coverage sets a deducible for the entire group. Once these deductibles are met, the carrier picks up the remaining claims.
There are other perks of being self-funded. Employers can sidestep conflicting health insurance regulation and benefit mandates, they only pay claims as they occur, and they have the opportunity to avoid paying state taxes on health insurance premiums.
The downside of self-funding is that it works best for large employers. But as of late, employers of 25+ are looking into the option. At MCV, we have a partially self-funded plan that has worked great for many of our smaller employers. Feel free to give us a call if you would like to hear more about this plan or would like to hear more about self-funding.