What is self-insurance?
Self-insurance (or self-funding) is an arrangement in which an employer assumes some or all of the risk of the health plan. Instead of paying premiums to an insurance company, the employer pays claims from its own funds. Self-insured companies may handle administration in-house or hire a third party administrator (TPA).

What is a third party administrator?
A third party administrator (TPA) is usually an external professional firm that pays claims and provides administrative services for self-insured benefits plans.

Why self-insure a health benefits plan?
Self-funding gives employers greater flexibility and control over their health benefits plan, as well as opportunities for cost savings. For example, self-insured companies can tailor their plans to a degree not available through standard insured plans, creating opportunities to improve cash flow, better contain costs, and meet the unique needs of their employees.

Is self-funding appropriate for all companies?
The decision to self-fund employee health benefits programs depends on many variables, including - but not limited to - number of employees, general health of employee population, location of employees, amount of risk the company is willing to assume, and past claims history. Please check with your broker or benefits consultant to see if self-funding is a viable alternative to your current health plan.

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