Self Funding Fact vs. Fiction

Myth #1: Self-Funded Health Plans are Exposed to Unlimited Risk

Except for the largest corporations, most employers who choose to self-fund their employee health plan purchase insurance to cover catastrophic individual claims and aggregate claims for the entire group if they exceed expected levels.

Myth #2: Only the Very Largest Companies Can Self-Fund

Most of the growth that has taken place in self-funding recently has actually been among smaller companies, some with no more than 50 employees. The economic advantages of self-funding do not change with the number of employees enrolled in the plan. The key is purchasing the appropriate level of coverage for catastrophic claims, which is referred to as stop-loss or excess-loss insurance. Many smaller companies have found self-funding to be very cost effective, flexible, and successful. Regardless of the number of employees enrolled in a self-funded plan, strategies such as utilization management and wellness-related education can be incorporated to allow the self-funded concept to succeed.

Myth #3: Only Large Insurance Carriers or HMOs Have Big Provider Networks

We work with a number of national and regional PPO networks and select the best one(s) to meet each client’s needs.  In addition, Benefit Plan Administrators has entered into a unique arrangement that provides employer groups in our marketplace with significant discounts and exclusive access to the GWH CIGNA National PPO Network.

Myth #4: Self-Funded Coverage is Not Accepted by Health Care Providers

In many parts of the U.S., a majority of the patients seen by providers each day are covered by self-funded plans. In fact, two-thirds of the employees in the U.S. are covered under an employer-sponsored health plan that is self-funded in some way and health care reform laws, enacted in March of 2010 are fostering even more growth for Self-funding.

Myth #5: Self-Funding is Too Much Work for the Employer

An employer is required to do little more day-to-day administrative work with a BPA-managed self-funded health plan than with any fully insured plan. BPA handles all the day-to-day claims processing and responds to virtually all customer service inquiries.

Myth #6: Self-Funded Plans are Not Subject to Regulation

Self-funded plans are subject to the Employee Retirement Income Security Act (ERISA), which was designed by Congress to provide stringent consumer protections. ERISA requires that each benefit transaction follow the coverage provisions outlined in the plan document. Furthermore, HIPAA Privacy, Security, and Portability provisions also apply to self-funded plans. At BPA, we make sure our business practices comply with these regulations, and we aid our clients with compliance as well.