Employers often find they experience the following advantages when operating a self-funded program:

• Lower Cost of Operation.
• Cash Flow Benefit.
• Control of Plan Design.
• State mandated benefits avoided.
• Effective Claim Processing.
• Administration tailored to the employer’s needs.
• Cost and Utilization Controls.
• Elimination of Most Premium Tax.
• Risk Management Effectiveness Through Reinsurance.

Historically, a self-funded plan will be more cost effective for the Employer than a fully insured plan because many expenses associated with a fully insured plan are eliminated, therefore gains due to better-than-expected claims experience belong to the employer, not the insurance company. In addition, employers with favorable claims experience do not subsidize those with poor experience.

	Claims Expenses			Claims Expenses Employer Savings
Insured Plan expenses include: Administrative Costs Claim Reserves Consulting Costs Contigency Reserves Insurance Company Field Expenses Insurance Company Overhead Premium Tax Profit Contribution Risk Pool Sharing			Self-Funded Plan expenses include: Administrative Costs Consulting Costs Reinsurance Coverage Claim Reserves