Self-funded medical plans

Why Self-Fund a Medical Plan?

Self-funded medical plans can make great sense for employers large and small who are facing escalating premiums as a result of health care reform. Here are just a few of the benefits of self-funding:

Cost SavingsCost Savings

Tax efficiency

Premiums are taxable in most states at about 2.5%. With self-funding, an employer would only pay tax on its stop loss premium, typically about 10% of health care expenses. By comparison, the employer would pay tax on 100% of its fully insured premium. Plus, self-funded medical plans are exempt from an Affordable Care Act fee that increased premiums on fully insured plans by 2-3%.*

Additional savings

Employers save when claims are lower than expected. Plus, there’s a cap on all claims provided by their aggregate coverage.

Better cash flowBetter cash flow

Employers pay as they go, only for the medical care that employees actually use. As a result, an employer can have greater cash flow on a monthly basis — money that can be invested in other areas.

Plan design flexibility and Greater transparency

The importance of stop loss insurance

Working with an experienced, financially sound insurance company, an employer can take advantage of the benefits of self-funding, while mitigating the financial risk if claims are higher than expected.

Advertisements

About robertjrussellcompanies

International Real Estate Agent * Insurance Broker * Radio Talk Show Host * Public Speaker * find out about me - visit http://www.robertjrussellcompanies.com
This entry was posted in Insurance and tagged , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s