When a company opts for a self-funded insurance plan, it assumes responsibility for claims related to the coverages it chooses to include.
This excludes certain types of coverage, which remain in the hands of traditional insurers, such as life insurance and critical illness insurance, for example.
Self-managed coverages typically pertain to experience-rated guarantees, the usage of which is usually capped or relatively predictable. They also cover prescription drug insurance, where the fluctuations and impact of high claimants are mitigated by specialized products and services.
How does it work?
For your employees and administrators, the experience is the same: they contribute in the same way and receive all the services offered in traditional insurance.
Premiums are determined through a thorough analysis of your claims history and a set of parameters, including the establishment of a reserve fund to anticipate variances.
For an administrative fee, the entire experience is managed by a specialized company: member and administrator services, technological tools, cash flow management, and reimbursements through an In Trust account.
What is the advantage?
++ The surpluses generated by your plan belong to you. ++
Common wisdom typically recommends allocating them to the budget of the following year to reduce premium costs, increase coverage levels, or give you even more flexibility in the future. You generally benefit from greater flexibility and visibility regarding the use of each dollar.
What is the risk?
Of course, the risk is that the total amount of contributions paid into the plan is less than the amount of claims reimbursed to the group. In this regard, claims for specialized medications are the most likely to have significant variances.
This is why the creation of a reserve fund is recommended and funded by contributions. In addition, specialized products are designed to cover claims exceeding a certain threshold, thus limiting the impact of new high claimants who could be added to your group.
Is such a model suitable for all organizations?
This type of financial agreement can usually be suitable for groups of between 30 and 400 employees. Specialized products exist for smaller organizations, while traditional products are ideally designed for larger employers.
30 to 400 employees
In any case, a thorough analysis is necessary to determine whether or not it is the ideal model for you. In this case, the Unixia team makes it its mission to help you see things more clearly.
Feel free to contact us anytime without any obligations,
The Unixia Team
