Keeping it simple…
Self-funded insurance is a self insurance arrangement whereby an employer provides health or disability benefits to employees with its own funds. In self-funded health care, the employer assumes the direct risk for payment of the claims for benefits. The terms of eligibility and coverage are set forth in a plan document which includes provisions similar to those found in a typical group health insurance policy.
In 1974 the Employee Retirement Income Security Act (ERISA) was passed allowing employers an alternate means of funding their medical and other employee benefit plans. Self-Funding provides an alternative to the high cost of fully insured benefit plans, flexibility of plan design and the potential savings.
With the spiraling cost of health care, many employers see self-funding as the only logical option for their employee benefit plan.
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Self-funding provides the potential for savings that are not available with a fully insured plan. If claims exceed expectations, the employer’s liability is capped under the reinsurance “stop-loss” policies.
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Fully-insured plan premiums are 100% taxable. With self-funded plans, the only taxable premiums are those paid for specific premium, aggregate premium and aggregate accommodations. This reduces the client’s cost.
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Self-funding provides you with the flexibility to design your benefit plan, subject to federal law. This differs from fully-insured programs where you have little or no flexibility in plan design and benefit programs other than in choosing the “canned” approach.
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Why you should consider L&W:
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Capable of customizing a plan to your needs
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Adjudicates claims promptly & correctly
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Upon request, provides & reviews re-insurance proposals
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Utilizes superior technology for cost-containment programs
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Re-prices PPO claims
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Ensures timely governmental reporting, including the Department of Labor and the IRS
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Provides complete financial accounting for your plan
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Administers COBRA, HIPAA, Section 125 & HRA administration
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Practices sound management reporting
Contact us today to learn more!
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