Self-Funded Insurance: How It Works

Self-funded health care plans replace traditional, off-the-shelf insurance packages by offering adjustable, customizable coverage options that improve benefits and reduce costs for employees and employers alike. Self-funded insurance allows companies and organizations to unbundle traditional insurance packages by creating their own plans specifically tailored to the needs of their unique workforce.

With self-funded insurance, each company determines their desired funding amount, using an insured stop-loss limit to control costs. If claims climb above that limit, your insurance picks up the difference. Unbundling allows you to design your own health care benefits and to get competitive bids on each of the elements, further reducing company costs. This funding arrangement gives you savings and cash flow alternatives.

In addition to these cost savings, with self-funded insurance your company holds its own claims reserves, which earn interest. If you have a good claims year, there's no middleman, so the savings are yours to keep. If, on the other hand, annual claims are high, you only pay up to your stop-loss limit and your insurer picks up the rest.

IAA has introduced many companies to self-funded health care plans. We work with you to design your program, pay and manage claims, establish a provider network and obtain stop-loss coverage.

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