Partially Self - Funded / ERISA Plans
Is Self-Funding Right For Me?
The first thing to bear in mind regarding partially self-funded plans is that the plan is a concept more than a product. It's a long term investment having to do with financing employee health care benefits. The second thing is that, for many employers, it is a concept that has helped them save thousands of dollars in health insurance premiums.
Insurance companies are looking for a profit:
Insurance companies, offering fully-insured products, try to price their products in such a way that, in the long run, will assure the high probability that they will earn a profit. Therefore, the premium paid by most employers to insurance companies for group health insurance far exceeds the actual claims and administrative costs generated by their plan. At best, employers are really just "trading dollars" with the insurance company and, in fact, are already "paying for their own claims." The most efficient means of providing these benefits, therefore, is through self-insurance.
