Fully Insured vs. Self-Funded

by Katie Mercurio

October 26, 2023

While it’s true that most self-funded health plans have over 200 employees, there are more creative self-funded plan options for smaller groups, including groups that have fewer than 10 employees.

In fact, we have experienced an enhanced level of stability for those employers that decide to implement a benefits captive strategy.  Being self-funded through a benefits captive provides greater stability on large claims experience, along with the advantage of participating in lower-than-expected claims experience.  Being able to leverage the marketplace based on Captive size also provides great advantages for smaller employers.  In addition, gaining transparency with Prescription rebates and financial assistance with Specialty drugs are other advantages of being self-funded vs staying fully insured.

There are various components of a self-funded plan.  Employers who are self-funded usually select an Insurance Carrier or Third-Party Administrator (TPA), a Pharmacy Benefit Manager (PBM), and a Reinsurance carrier (Stop Loss coverage).  There are pros and cons associated with every vendor in the market.

Remember that being fully insured does not mean less long-term risk for small to medium sized employers.

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