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Why School, City and County Employers are Moving to Self-Funded Health Insurance Plans

Moving to self-funding is an ACA strategy that many schools and local governmental employers are embracing in order to save money and control costs. When using a self-funded plan, employers assume the liability and risk associated with uncertain healthcare costs in exchange for a number of significant financial benefits. To protect against unpredictable or above-average claims, the organization purchases stop-loss coverage as a way to limit risk. The stop-loss provider pays any claims higher than that pre-set amount.

Here are four key advantages for self-funding:

  1. Plan Design Freedom: Utilization reports can help you create a multi-year benefits strategy plan that can be customized, adjusted and changed in endless ways.
  2. Tax Savings: In certain states, there are no premium taxes on self-funded plans. You can also save on ACA taxes and fees including Medical Loss Ratio Rules, Annual Insurance Fees, Reinsurance Fees for 2015-16 and Insurance Premium Reductions.
  3. Lower Administrative Costs: Self-funded plans administered through a third party administrator are usually less expensive than through the insurance carrier.
  4. Better Cash Flow: Funds are only required when claims are paid. This allows your organization – instead of the insurance company – to earn interest on the reserve. Also utilization reports can help forecast claims and insurance costs for next year, allowing for better cash flow.

 

For more information, watch our video or read our whitepaper.

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Erin Woulfe
Erin Woulfe
Erin Woulfe likes to write about things that matter. Keeping her finger on the pulse of what’s happening in the public sector world, she blogs about the latest legislative news and employee benefit trends that affect our school, city and county clients. She’s been with NIS since 2002. “I love connecting to our clients and providing them with the tools they need in order to administrate their plan,” says Erin. “Whether that be materials to educate their employees on certain benefits, how to effectively communicate change within an organization or just providing tips and how-to’s to help them make their job easier.”

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