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What is Self-Funding?

  • What is Partial Self- Funding?

Typically, only the largest companies can afford the risk associated with 100 percent self-funding. When most companies consider self-funding, they are actually dealing with partial self-funding. Partial self-funding means a re-insurance or stop loss policy is purchased to limit the risk. 

There are two distinct types of re-insurance policies: 

    • Specific Stop Loss reimburses the employer for catastrophic claims on any single individual or member paid in excess of a certain dollar amount
    • Aggregate Stop Loss reimburses the employer when the total of all employees and dependent claims exceeds a certain dollar amount
  • How does Partial Self Funding work? 

An employer establishes an account for paying claims up to the pre-determined stop loss reinsurance amount. This account may be pre-funded or funded as claims are paid. The Third Party Administrator (TPA) pays the claims out of this account and works collaboratively with ConnectCare. 

  • What are the benefits of Partial Self-Funding through ConnectCare? 
    • Retention:  The employer retains case reserves for further claims that are typically accumulated by insurance companies
    • Elimination:  Premium taxes payable to the state are eliminated
    • Reduction: Costs of administration, commissions, claims processing and printing fees are reduced significantly
    • Flexibility:  The employer games flexibility and maintains control of the plan

Partial self-funding assists employers in providing cost-effective health care benefits.  With increased cash retention, tax elimination, administrative cost reduction and better flexibility, self-funding allows the employer to manager employee health benefits while protecting the financial well-being of the organization.

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