Comfort Through Control

Self-funding gives employers greater control over both the design and financing of their health care benefit plan. While the employer assumes the risk of expected claims, BPA helps clients secure Stop Loss insurance to protect their plan against unpredictable or catastrophic claims.

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With BPA as your third party administrator, self-funded plans are easy to design and easy for the employer to operate. BPA provides ID cards and a plan document, processes all claims, produces checks, addresses all customer service concerns and provides 24/7 secure access to detailed information on eligibility, benefits and claim status. Timely and meaningful data for plan analysis gives our clients the information needed to make more informed decisions.

Self-Funding Offers Important Advantages

Greater Financial Control – Most employers with self-funded plans fund claims as they come due rather than funding them through advance premium payments, which means that you are holding or investing your money rather than an insurance company. BPA provides you with clear reports showing how every health plan dollar is spent.

Lower Costs – By funding claims directly, an employer avoids the costs of claim reserves, retention to cover the insurance company’s administrative costs, profit margin, risk charges, premium taxes, and contingency margin, which are included in a fully-insured premium over and above the costs of expected claims. Today, these reserves and retention charges can vary between 10% and 30%.

More Flexibility – Self-funding allows employers to design a health benefit plan to address specific employee needs and company objectives. Self-funded plans are also exempt from state insurance laws that typically mandate certain benefits for insured plans.

Cost Management – Plan design flexibility and on-going analysis of plan expenses allow self-funded employers to make the plan design changes needed to better manage costs. Self-funded plan designs can include strategies to monitor utilization, take advantage of discounted provider arrangements, and assure appropriateness of care, all of which encourage wellness and provide incentives for efficient utilization of care.

24/7 Access to Information – We provide convenient, secure access to all the information our clients need to manage a self-funded plan effectively. Authorized individuals receive confidential monthly reports, and everyone covered under the plan has secure online access to timely benefit-related information, which typically includes eligibility, claims payments and more.

Self-Funded vs. Fully Insured

In a traditional fully insured health plan, your company pays a premium based on the number of employees enrolled in the plan. Your monthly premium only changes during the year if the number of enrolled employees in the plan changes. The insurer collects the premiums and pays the health care claims based on the benefits in the policy you purchased. The covered persons are responsible to pay any deductible amounts or co-payments required for covered services under the policy.

The cost of a self-funded plan has fixed components similar to an insurance premium, such as administration fees, stop-loss premiums, and claim costs. The administrative fees, stop-loss premiums, and any other set fees charged per employee are referred to as fixed costs and are billed monthly based on plan enrollment just like an insurance premium.

The employer sponsoring a self-funded plan also pays the claims costs incurred by the covered persons enrolled in the plan, and this cost varies from month to month based on health care use by the covered persons. Stop-loss insurance reimbursements are made if the claims costs exceed the catastrophic claims levels in the policy. This means that the total cost of a self-funded plan is the total of fixed costs plus the claims expense less any stop-loss reimbursements.