Are you ready for self-funding?

What's the difference between being fully insured vs. self-funded?

A fully insured employer pays a predictable fixed premium every month that is established at the beginning of the contract period. A self-funded employer pays claims as they are incurred, which means they typically vary from month to month, on top of fixed administrative costs.

With self-funding, you directly fund the claims of your own group and only pay for the health care services actually used by your employees and their families. Fully insured premiums, however, are the same per employee regardless of the services used.

Is my business ready to make the leap to self-funding?

Before considering a self-funded health insurance plan, your business should have a strong balance sheet, steady cash flow to fund claims, a stable number of employees (Wellmark requires at least 25 enrolled in the health plan) and a desire to actively manage your health plan.

You may also want to look beyond your finances to make sure your business and your HR staff are ready to take the leap. If you can answer “yes” to the following questions, your business may be ready for a self-funded health insurance plan.

You're ready to manage your health insurance plan from top to bottom. Self-funding gives you the opportunity to fine-tune copay amounts, benefit designs and customize well-being programming to fit your unique workforce and worksite.

Take control of your health care spending

You have options when it comes funding your health insurance plan. Whether you choose to be fully insured or self-funded, Wellmark will walk you through your options and help you decide which funding option is right for you.

Review your options

Your staff is ready to take on administrative compliance with applicable regulations. Though compliance is likely nothing new for your business, it does take on a different form with self-funding — similar to how you handle personal health information and what you report to the government, or what you report for The Employee Retirement Income Security Act (ERISA).

You want more access to claims data and utilization information. Self-funded plans own their claims and utilization data. While you won't be able to access individual, personally identifiable claims data, you will see it in aggregate and can analyze from there.

You understand the impact high-cost claimants may have on your budget. Even though high-cost claimants — those whose claims cost $50,000 or more per year — make up a small percentage of members, they are the largest driver of health care expenses.

You have a longer-term view of health insurance costs and improving the health of your employees. Self-funding likely won't provide huge savings in the first year or even in five. But with smart management, you'll be able to use claims and utilization data to fine-tune your benefits and well-being programs to the needs of your workforce.

Don't forget about stop-loss coverage

Self-funding may seem intimidating, but carriers offer protection for your business against higher-than-expected claims. Stop-loss insurance for self-funded plans covers expenses for the contract period that exceed pre-determined levels, known as stop-loss deductibles. There are two types of stop loss policies for self-funded plans:

Individual stop-loss insurance protects you from higher-than-expected claims by your individual employees.
Aggregate stop-loss insurance protects you from higher-than-expected claims by your entire member population.

Stop-loss coverage will become part of the fixed costs of self-funding, along with administrative fees. That's why truly understanding contract provisions is vital to making informed decisions.

Let’s talk about your funding options

Ready to find the right coverage for your business? Whether you’re exploring fully insured plans or the flexibility of self‑funding, we make it easy to compare options, understand costs, and get the information you need to make confident decisions. Request your quote today and see how Wellmark can support the health and well-being of your employees.

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