Self Funded Health Insurance

Sterling Insurance Agency offers self-funded health insurance to employers in Idaho, Utah and Wyoming.

Self-funded medical insurance is a group health policy in which the employer agrees to pay for small medical claims and purchases stop-loss insurance to pay for larger ones. Instead of the insurance carrier doing the administration, employers have a licensed third-party administrator to collect premiums and pay claims from the employer’s claims fund. The employer receives monthly claims reports showing how each dollar was used and gets refunded any amount in the claims fund that was not necessary to pay claims.

Many insurance carriers today offer self-funded health plans for companies with as few as 20 or more employees.

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How are the Premiums Calculated in a self-funded health plan?

A self-funded health plan costs are made up of three charges, including administration and sales costs, stop loss coverage and a claim fund.

Administration and sales costs pay for the management and sales expenses of the your coverage including underwriting, billing, claims processing, PPO network access fees, customer service and compensation for the consultant/advisor for their role in establishing and servicing the plan.

Stop Loss coverage provides protection for large healthcare  claims.  The specific deductible is for any one individual (employee or dependent) whose claims exceed a stated dollar amount annually (ie: $25,000).  The aggregate deductible is for the entire group when claims exceed the total amount in the claims fund.  Stop loss coverage gives the employer important protection from unexpected claims during the plan year and the run-out period.

The Claim fund is the money set aside to pay smaller healthcare expenses. The claim fund total is the claims payable by you for the plan year based on this census and benefits.  Some organizations prefer to pay a level amount each month into the claim fund instead of a variable contribution based on claims.  In a level-funded arrangement, any unused money in the claims fund will be refunded to the employer at the end of the run-out period.

Why are Self-Funded Health Plans Popular in States like Idaho, Utah and Wyoming?

Self-funded health insurance can save employers the most amount of money when claims are kept as low as possible.  By utilizing Sterling Urgent Care clinics for their primary and urgent care needs companies have been able to greatly reduce their smaller claims and therfore leave more money in the employer’s claim fund.  Sterling Urgent Care clinics are conveniently located in Burely and Idaho Falls, Idaho; Logan, Utah; Afton and Rock Springs, Wyoming.

Another reason Idaho, Utah and Wyoming are particularly good markets for self-funding is because most employers use preferred provider organization (PPO) networks in these states rather than more restrictive health maintenance (HMO) plans.  Because PPO policies are based on a fee-for-service model, every dollar saved in claims results in more money being refunded to the self-funded health plan.

More Information

For more information regarding self-funded health insurance and how the plan can benefit your company, contact Sterling Insurance Agency.

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