Changing the Landscape of

Healthcare Costs and Outcomes

New Directions In Healthcare

Greater Freedom of Choice - Substantial Savings

Advantages of Self-Funding:

Self-funded plans can be more cost effective than fully insured plans because many expenses associated with fully insured plans are eliminated, and gains from better than expected claims experience belong to the employer.  Employers with favorable claims experience do not subsidize those with bad experience.

Upon adoption of a self-funded employee benefit plan, an employer immediately puts to work many advantages over fully insured plans

• Custom Benefits

• Lower Costs

• Improved Cash Flow

• Risk Management Control

• Eliminate Carrier Profit Margin

• Eliminate Premium Tax

• Control Claims Costs

• Control Utilization

• Large Case Management

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• Self-funded plans may be tailored to fit the needs of the group.  This means the employer is able to develop a plan of benefits valuable to their employees.  The employer may also redesign their plan to eliminate abuses if they are encountered.

• Lower cost of operation.  Plan administration generally costs less through a professional third-party-administrator (TPA) than with fully insured plans.

• The employer has complete control and knowledge of where and how contributions are distributed with self-funded plans.

• Eliminate carrier profit margin and risk charges.  Fully insured plans include carrier profit margin and risk charge.  These expenses are substantially reduced and/or eliminated with self-funded plans.

• Self-funding eliminates premium tax.  In most states there is no premium tax for the self-funded claim fund; thus an immediate savings equal to the amount of the premium tax is realized through self-funded plans.

• Return on investment for reserves.  Interest on reserves established by the employer remain under the employer's control.

• Claim cost and utilization controls.  Professional third party administration companies offer second surgical opinion programs, outpatient surgical programs, large case management, access to PPO's, RX management,  and other programs through a variety of sources rather than an employer being able to use only the insurance company's in-house programs.

• Cash flow benefits.  The employer's cash flow is improved when money formerly held by insurance carriers in the form of various reserves is freed for employer use.

• Mandatory benefits avoided.  State regulations mandating costly benefits can be avoided because self-funded plans are subject to ERISA.

• Risk management effectiveness.  The employer may choose the amount of risk to retain and the amount to be covered by Stop Loss coverage.  Fully insured plans have set pooling levels allowing little flexibility.