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It is important to discuss with your broker the responsibilities and risks involved with self-funding, and whether it is an appropriate choice for you and your business.  Once you’ve made the decision to take control of your company’s benefits, work with your broker to complete the steps listed below.

Step One: Select a Plan of Benefits

The employer, with the assistance of an agent, broker and/or a third party administrator (TPA), decides on a plan of employee benefits. The plan may be identical or similar to the plan currently provided on a fully-insured basis, or it may be a new, innovative plan not available in the fully-insured market.

Step Two: Contract with the TPA

The TPA administers the plan on behalf of the employer. This includes:

• Managing employee enrollment
• Establishing a trust account and maintaining funds for claim payment
• Managing Health Savings Account (HSA) funds if necessary
• Paying incurred claims
• Preparing claim reports or other data necessary for the plan or the Stop Loss Insurer
• Preparing government-required reports
• Billing and collecting administrative fees and Stop Loss premiums for the plan

Step Three: Prepare the Plan Document

A plan document is prepared. It contains all of the plan provisions, including eligibility, which benefits are covered, limited or excluded, and termination. Materials such as employee benefit descriptions, employee and dependent I.D. cards, and other documents needed to administer the plan are usually prepared by the TPA.

Step Four: Secure Stop Loss Coverage

Arrangements are made to purchase separate Stop Loss coverage in order to cap the plan’s medical claim payment responsibility. The amount of risk to be insured by the Stop Loss coverage will vary depending on the number of employees, plan of benefits, location, financial resources, prior experience, tolerance for risk, and other factors. Our deductibles start at $15,000 and increase according to the employer’s need. The limit is determined by the amount the plan is required to pay for an individual’s medical claims (Specific Stop Loss coverage) and the combined amount of all eligible medical claims the plan must pay during a given period (Aggregate Stop Loss coverage). This combination ensures protection against both high individual medical claims costs, and high volume medical claims costs.

Step Five: Select a Contract Period

The Contract Period chosen determines how medical claims are processed. Some Contract Periods may not be available, depending on the employer’s group size or other factors. Eligible medical claims incurred and paid within the Contract Period are covered by the plan or Stop Loss coverage. The most common Contract Periods are 12/12, 12/15, or 12/18. This means that the amount of claims incurred during a twelve month period can be processed and paid in either twelve, fifteen, or eighteen months.