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Tips and Tools
Partial self funding does not work for all businesses. Of course, the only way to know for sure is to apply through a TPA and see what happens. (TPA's, or Third Party Administrators, are the ones who set up and administer self funding plans for small businesses.) Before going through all of that, however, here is a quick checklist to see if it is an option your business should consider.

How many employees do you have? If the answer is less than 10, you should not consider it at all. If it is less than 25, then what is your average annual salary per employee? If that is less than $50,000 there is a federal tax credit available for up to 50% of your businesses premium outlay.... You probably are better off having a standard ACA fully insured group plan and take the refund, at least as far as your bottom line is concerned; however the credit will vary, so it may be worthwhile to investigate partial self funding.

Ok, so now you have passed the first major obstacle. Now let's analyse your group's demographics. Do you have a lot of medical usage? For example, a lot of people taking a lot of medications, or people in high risk medical conditions, like heart disease, diabetes, chrones disease, etc? If you have a larger group than a few of these situations may not affect your claims fund adversely; however, the smaller the group or the larger these risk are proportionately to the group size, the more likely self funding will not benefit you. Is your group predominately older? Again you are more likely to have a high claims history, making the self funded option less viable.

If you have passed this simple checklist than partially self funded may be a viable option for you. There are other factors that could also limit the effectiveness of a partially self funded plan, so a more thorough answer can be obtained by examining the group in greater detail; but remember, a TPA can turn down a group if it believes the claims fund will be drained by any situations inherent in the group.

If you would like to discuss your group's possibilities further with us, please Contact Us