For some employers, a prepackaged health insurance plan doesn’t meet the needs of the business’s employees. Self funding employee insurance eliminates the health care provider’s obligation because the business assumes financial risk for providing health care benefits directly to their employees. Self funding can be an attractive option to both small and larger businesses:
- A small business would avoid premium taxes and risk charges from the state if they self-funded.
- A larger employes would be able to generate increased cash flow in an interest-bearing account holding their reserves.
- Employers whose business crosses multiple states would not be subjected to complying with multiple states’ regulations
- It offers all employers the option to diversify plans for their employees.
- About 2% would be saved annually for assuming overhead risk charges from the insurance company for the insured policies.
- About 2-3% could be saved annually because self funded policies are not subject to the state premium taxes.
Your business is only subject to Employee Retirement Income Security Act compliance. This sets a minimum standards for retirement and health benefit plans in private industry for employees who have a retirement package. Stop loss insurance, which covers your employees’ medical bills after a certain predetermined amount has been paid, can be customized for high-risk claims.
The following benefits may be self insured by your business:
- Health Care including PPO, POS, and HMO
- Short term disability
- Prescription Drugs
- Vision Care
As a business owner, you can decide how to adjust eligibility, exclusions,cost-sharing, policy limits, and retiree benefits.
As an employer, you also have control to administer your own benefits should you have the resources.
Call ERM Insurance if you have any questions at (949) 222-0444. ERM provides Orange County health insurance and employee benefits.