What is Self-Funded Medical?

Why would you pay for something you don't use? Why do you do that in medical insurance? In a self-funded medical plan, you only pay for what you use. That is, you only pay for medical claims that are incurred.

In a traditional "fully insured" medical plan, you pay your insurance company a fixed dollar amount each month to provide your coverage. It doesn't matter if you have a one dollar claim or a million dollar claim, you pay that same amount. How do insurance companies make money? By charging you more in premium than they pay out in claims!. Have you ever asked your carrier to provide you with your claims and compared that to the amount you paid in premium?

You'd be surprised to find out how many thousands of dollars you paid in premium compared to the dollar amount in claims paid. Why not do this yourself? Why not put that same premium in your own "claims account" and only pay for the claims your employees incur and then at the end of the year, keep all of the leftover premium?

You Can! It's really that simple. With a Third Party Administrator (TPA) taking the place of your insurance company, you can design, fund and pay for your own health plan. Your TPA will do all your administration, pay claims, provide ID cards and keep your plan in compliance.

What If I have the "million dollar claim"? - In a self-funded plan your TPA will purchase an underlying insurance contract that will cover any claim above a fixed dollar amount you select. It's nothing more than a high deductible amount that you pay first before the underlying insurance contract pays.

What if I have multiple large claims? - Your insurance contract will "limit" your annual liability. That is, you will only pay a fixed dollar amount over a 12 month period. This protects you against numerous large claims.

What if I have large claims each month? - You'll also have coverage that limits the amount you have to pay on a monthly basis. For example, suppose your "annual limit" for all claims is $120,000. You divide that by 12 months and you are only liable for $10,000 per month. Anything over that, the insurance contract pays.

What happens if I go over my "annual limit" - Your insurance contract will cover any and all claims that exceed the annual limit set by your plan. So your liability is pre-determined.

What happens if I have money left over? That's the bottom line of a self-funded medical plan. You keep all of the left over premiums that funded your plan, not the insurance company!

In most cases, we can take the same premium dollars you're spending now and move you into a self-funded plan that allows you the opportunity to keep all of the savings. It's a win-win situation in today's healthcare market.

Call us for a FREE - NO OBLIGATION QUOTE!!

Mike Edwards
205-647-4775
E-mail: mebginc@mebginc.com