In a traditional employer-sponsored healthcare insurance plan, both the employer and employee pay monthly premiums. Employees choose plans based on their financial and healthcare needs, which means some things are covered and some aren’t. On top of that, employees often have to pay deductibles before their insurance kicks in, and that can often be thousands of dollars.
In a self Funded insurance plan, employers assume direct responsibility for the cost of the enrollee’s medical claims. So instead of sending premium payments to an insurance company, they pay for medical expenses out of pocket.
While on the surface that might sound more expensive, there are a number of benefits of self-insurance plans, including potentially saving tens of thousands of dollars each year. Plus with the additions of Stop Loss insurance, it caps the amount an employer would pay in claims. This eliminates the financial risk that could financially hurt an employer.