The key cost components in providing health care benefits are essentially the same whether an insurance carrier or a self-insured employer funds the benefit. In addition to typically higher administrative costs, the fully insured program is also subject to extra categories of expenses not associated with a Self-Funded program. These expenditures usually require up-front commitment of funds, are typically not refundable and are not fully available to be used to pay the specific employer's claims. Under a Self-Funded plan the Plan Document controls the plan just as the policy controls the plan with conventional insurance. A clearly worded, professionally drafted Plan Document is a key ingredient in establishing an effective Self-Funded plan.
Most employers choose to purchase stop loss coverage to protect against unexpected large claims.
This method of stop loss safeguards the plan against absorbing extensive liability for unusually large claims submitted by any individual plan participant. The Individual Stop Loss does not include plan deductibles, plan co-pay amounts, expenses not reimbursable under the terms of the Plan, expenses reimbursable from any other source or cost of claim payment or expense litigation. In other words, the ASL limit caps the maximum dollar amount for which you are responsible per plan year. All contractual claims payments count toward the aggregate. We are financially able to withstand an occasional year when employee health-care claims may be higher than anticipated.