The Benefits of Self-Funded Insurance

The Benefits of Self-Funded Health Insurance_Roundstone Insurance


  • Self-funded health insurance is an alternative to being fully insured and paying a fixed premium to a commercial insurance company.
  • With self-insurance, the employer pays the healthcare claims of employees itself and buys stop-loss insurance to protect against high-cost claims.
  • Self-funded captive health insurance offers control, flexibility, transparency, and savings.
  • You can self-insure as part of a group medical captive. Instead of doing it alone, you are together with other companies in a pool to share risk.


Self-insurance, also known as self-funded health insurance, offers significant benefits for small to midsize companies over traditional fixed-cost health plans. With self-insurance, your organization takes back control. You have the opportunity to provide quality benefits to employees, helping attract and retain top talent in your organization. And you have the ability to create a long-term strategy to control costs for a top-line expense and not be subject to unsustainable increases at every renewal. Self-funded health insurance is an affordable and viable solution to escalating health care costs. And thanks to the group captive model, small to midsize businesses can now take advantage of the savings and care quality of a self-funded health insurance plan.


Explore the flexibility, transparency, and savings of self-funded health insurance.



What Is Self-Funded Health Insurance?


Self-funded insurance gives a business greater control over their insurance costs. Instead of working through a traditional insurance carrier and paying a fixed premium, you create an account specifically for covering health expenses, and pay them as they occur. With self-insurance, you only pay for what you use. You would also purchase stop-loss insurance to cover large, catastrophic claims.


Most large corporations choose self-funded health plans because they have large numbers of employees and plan members to make it possible to accurately estimate the claims they will pay. Since premiums are based on national statistics, companies may pay more for healthcare coverage, even if their employees are healthier than the national average. So, they are better off self-insuring.


How Healthcare Captives Make Self-Funded Insurance a Viable and Affordable Solution for Small to Midsize Businesses

Captives are a type of self-funded insurance. They are important because they make it possible for smaller businesses to take advantage of self-funding. Many companies are banded together in a captive, which gives them the large numbers and purchasing power of a Fortune 500 corporation. The captive participants each pay a portion of their premiums into a shared risk pool. This approach means the participating companies get to share the risk, unlike standard self-insurance where one company accepts all of the risk. Captives make self-funded health insurance an affordable and viable option for small to midsize businesses.


As with pure self-funding, you only pay for what you use. By self-insuring with a group captive, you keep what you don’t spend in your own claims account, and – additionally — any unspent premium in the pool is also returned to you pro rata. A win-win!


Advantages of Self-Funded Health Insurance


Here are some of the top advantages for small and midsize companies that choose self-funded health insurance in a captive:


  • Save Money: Save on health insurance with lower fixed costs – and only pay for what you use.


  • Cash Back: You keep any unused funds in your claims account, and receive an annual distribution (pro rata) of unspent premium in the captive pool.


  • Get Control: Don’t be stuck with a one-size fits all plan. By self-insuring, you can customize your health plan to meet your unique needs – and your employees’ best interests. Chose best-in-class solutions for better healthcare at a lower cost.


  • Gain Visibility: Being fully-insured means you are totally unaware of actual claims relative to the premium paid. With self-funding, you have complete visibility into claims and can spot opportunities to actively manage costs for savings. You get data and insights to help make better decisions and optimize plan utilization.


  • Lower Risk: With self-funded health insurance, you gain high control over benefit design. Take some risk by paying for your employees and their families’ claims up to your custom deductible; share most risk with the other employers for claims over your deductible; and shift high-cost catastrophic risk to the stop-loss insurance.


  • Great Experience, No Hassle: For employees: same ID cards, same doctors, same pharmacies, and same hospitals. For you, simple onboarding, customer service, claims management, and ongoing strategy. From the employees’ perspective, the experience of a self-insured plan is very similar to a fully insured plan.


  • Flexible Funding Options: The ability to pay claims as you go, fund to max, or fund to projected costs, depending on your cash flow and budgeting preferences.


  • Cost Containment: Ability to implement cost containment solutions to impact 85% of expenses, which are variable costs.


  • Peace of Mind: By switching to a self-funded health insurance plan, you can finally get off the rollercoaster of renewals and increases every year with a strategy that lets you have control over your healthcare costs over the long term.


Is Self-Funding Right for Your Business?


Self-funded health insurance offers new opportunities for businesses to control their healthcare coverage and expenses. Even small and midsize businesses can capitalize on the self-funded model’s benefits with the help of a group captive. Why shouldn’t you be able to purchase health benefits like the Fortune 500 does?


Roundstone clients save 20% on average by choosing self-insuring with the group captive vs a traditional fully-insured plan.


Call 440-617-0333 or contact us to learn more about how you can benefit by self-insuring with the Roundstone captive solution. Let’s just talk!




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