PPACA spurs rising interest in self-funded plans

Self-funding differs from fully insured health insurance in a number of ways. In a self-funding arrangement, an employer basically agrees to cover all claims in the health care plan.

Employees still pay premiums and deductibles, but the employer covers claims up to a certain level called an aggregate attachment point, which are based on the total number of expected claims over a year.

Though self-funded models used to be generally more popular with large employers, in the past decade, more and more small- to mid-size employers have turned to self-funding as a way to control costs. Many in the industry expect reform will spur even greater interest among employers.

“A properly designed self-funded health plan can allow a company to directly reap the benefits of their cost containment and wellness activities as opposed to having to pay a monthly premium based on an arbitrary set of rating restrictions,” Phillips said. “As companies struggle with the growing cost of providing quality benefits, we expect self-funding to continue to grow in popularity.”

See also: 

• Self-funded insurance grows by going smaller
• Infographic: By the numbers: The health insurance market
• Illinois to market PPACA exchange