Opponents of self-funding make the valid point that very large claims do happen. However, as a group matures, the following four strategies can carve out the most likely high-cost risks.
While the preceding options may be parts of a comprehensive cost containment strategy for self-funded medical plans, level-premium equivalent plans bend the cost curve even further. By purchasing aggregate stop-loss with accommodation as well as specific stop-loss with immediate reimbursement, employers are guaranteed maximum annual costs and fixed monthly payments.
A comprehensive self-funded medical plan should offer more flexibility and greater control with potentially lower costs than a fully insured arrangement. When these attributes work together, employers have more plan options and the opportunity to offer higher quality of care.
Smaller employers can compete with larger organizations when it comes to self-funding medical benefits through a level premium equivalent arrangement. This approach is not for every employer, but a self-funded medical plan can provide big-employer advantages for those smaller employers that fit the bill.
Legal Disclaimer. Views expressed here do not constitute legal advice. The information contained herein is for general guidance of matter only and not for the purpose of providing legal advice. Discussion of insurance policy language is descriptive only. Every policy has different policy language. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions. Please refer to your policy for the actual language.
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