As employers fight today's spiraling health care costs, many have undertaken to self-fund their health benefit plans including dental so that they may take control of their financial contributions to the plan and take advantage of ERISA protection from a burdensome and complex array of state insurance laws. Dental Level-Funded plans return the entire surplus to the employer when claims are lower than expected.
The most popular form of self-funded health plans are Partially Self-Funded plans. Through this process, the employer is provided with reinsurance coverage that protects against large claims and catastrophic losses.
Level funded plans are more attractive in 2019 for all employers if the risk is evaluated by the broker and insurance carrier: the potential for cost savings is increased and only made possible by a selection process that avoids known high risk conditions. Potential for significant savings with a chance of a claims surplus share upon renewal.
There are two types of self-funded health plans.
Partially self-funded health plan
The employer assumes a portion of the risk for providing health care benefits to his or her employees and usually contracts an insurance carrier or with a third party administrator to provide services.
Fully self-funded health plan
The employer assumes all of the risk for providing health care benefits to his or her employees and usually contracts with an insurance company ( many offer self funding) or third party administrator to provide services. This option is generally only attractive for groups that cover over 500 employees and contribute to the premium and encourage participation. We generally do not recommend self funding to groups with low participation. High risk employees and dependents usually enroll and without large numbers of healthy members, the loss ratio will lead to unusually high insurance costs at renewal when the account is reviewed by an underwriter.