3 Self-Funding Misconceptions

Misconception #1:

“My company is too small to make a self-funded program worthwhile”

Most stop-loss carriers require a minimum of 51 participants in order to write a policy. If you have over 75 employees, we think its especially worthwhile to look into this mechanism of self-funding.

Misconception #2:

“We can’t manage the extra responsibilities of a self-funded plan”

With an active and informed consultant and the right third-party administrator to help create the proper health plan infrastructure, all the leg work is done by people and parties operating in your best interest.

Misconception #3:

“My company could be liable for a huge amount of money if we have a bad year”

Stop-Loss insurance is put in place on self-funded plans to limit the liability the employer may be exposed to, which caps a company’s liability within the policy period. There are 2 types of stop-loss insurance to know about:

• Specific Stop-Loss- This type of stop-loss insurance is used to protect against catastrophic or abnormal claims against a specific individual. Set using a specific deductible and coverage paid through set monthly premiums, you as an employer cap your liability at the specific stop-loss deductible granted.
• Aggregate Stop-Loss- Looking at the whole group rather than each, specific individual. If the projected claims exceed 100%-125% of the expected annual claims of the whole group, money paid out is reimbursed by the stop-loss carrier. This coverage is also paid for through set monthly premiums.