Self Funded Plans
- The cost is based on actual claims rather than assumed usage.
- Lower risk charges and no need for an insurer to hold claims reserves.
- Clients are billed for actual monthly claims (plus administration fees and taxes) versus a negotiated renewal with an insured plan.
- Automatic claims processing system ensures accuracy and consistency in claims adjudication
By exploring alternate funding methods for your benefit plan you have the potential to achieve true cost reduction. This may include accepting responsibility for the payment of more predictable health and dental expenses while the high risk coverage such as life and disability get funded through an insurance contract. Alternatively if the risk tolerance is low, a fully insured program can be created and implemented through a volume-discounted pool.
Here are some factors to consider when establishing a self funded plan:
- Self funded plans reduce or eliminate insurance company risk charges, reserves, contingency allowance, interest factors and premium taxes, thereby creating an initial and ongoing savings.
- Analysis of expected claims will help establish the amount of risk that is appropriate for each company. We assist our clients to determine the right formula.
- Adverse risk can be mitigated by adding a stop loss component.
- Starting with a realistic rate based on expected claims, plan expenses and inflation will allow for stable costs and avoid significant cost increases.
- Size of the employee group is not necessarily the determining factor. Self funding works well for smaller companies if correctly established.
Due to the complexity of this unique proposition and the individuality of its success, you need to have proper advice. At TD Benefits we provide a complete service; including plan set-up, documentation, administration and claim payment in accordance with plan provisions and within CCRA guidelines.