At HNAS, our mission is to partner with brokers and employers to develop a customized, long-term strategy for high quality health benefits while still controlling cost. A premier health plan is still essential to attract and retain top talent, so perpetuity of that program is vital to our collective success. We believe self-funding is the cornerstone for achieving this goal.
Key advantages of a self-funded plan are that it can:
- Lower fixed costs. Administrative fees of a professional TPA are lower than those of large insurance companies.
- Improve cash flow. In fully insured arrangements, the carrier retains reserves to cover potential future expenses. Self-funding allows you to retain funds until needed, which can create additional revenue for the employer in the form of interest.
- Allow control over plan design. You can redesign benefits at any time to address the changing needs of the plan and its participants.
- Eliminate mandatory state-regulated benefits. Since most self-funded plans are subject to the Employee Retirement Income Security Act (ERISA), they are not required to include state mandates.
- Reduce premium taxes. You do not pay taxes—of up to 5%—on your claims fund. Since claims represent about 75-80% of total plan costs, this savings can be significant.
- Eliminate carrier profit margin and risk charge for the bulk of the plan. These charges would only occur in any stop loss insurance purchased for the plan.
- Allow flexibility in value-added programs. Self-funded programs have choices in network partners, utilization management, large case management, subrogation, hospital bill audit programs, and other programs for a full complement of plan-appropriate partners.