A self-insured (self-funded) health plan is a great alternative to purchasing a fully insured plan from an insurance carrier. Employers choose to self-insure because it allows them to save the profit margin that an insurance company adds to its premium for a fully-insured plan. However, self-insuring exposes the company to much larger risk in the event that more claims than expected must be paid. With a self-funded health plan:
There are two main costs to consider: fixed costs and variable costs.
The fixed costs include administrative fees, any stop-loss premiums, and any other set fees charged per employee. These costs are billed monthly by the TPA or carrier, and are charged based on plan enrollment.
The variable costs include payment of health care claims. These costs vary from month to month based on health care use by covered persons (eg: employees and dependents).
To limit risk, some employers use stop-loss or excess-loss insurance which reimburses the employer for claims that exceed a predetermined level. This coverage can be purchased to cover catastrophic claims on one covered person (specific coverage) or to cover claims that significantly exceed the expected level for the group of covered persons (aggregate coverage).
Investment Solutions
In today’s heavily regulated market, tax benefits and investment dividends achieved through retirement plans can be significant. Many plans offer immediate dollar-for-dollar tax savings. But the rules are diverse and complex.
Cosmo Financial’s expert consultants can help you achieve your financial objectives through a host of wealth building investment strategies and a full range of variable products to help complement your current financial position. Call for an appointment at your convenience.
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