Why Provide A Self-Funded Employer Health Plan?

27 July 2022
 Categories: Health & Medical , Blog


Health insurance is a necessary precaution for everyone. It's also a legal requirement that employers must offer to their employees. Many employers choose to offer health insurance through large insurers. However, employers can also choose to handle employees' health claims directly through self-funded health plans. Here are four reasons to provide a self-funded employer health plan to your employees.

1. Tailor your health plan to suit your employees' needs

When offering health insurance through a pre-existing health insurer, employers must choose from available health plans. However, these plans may not meet the needs of their employees. Employers know their workers best. They know the health risks and hazards most likely to befall people in their industry and can tailor their offerings accordingly. Self-funded employer health plans can give your employees access to the health services they need, when they need them.

2. Save money on health insurance costs

Self-funded health plans can also save employers money on health insurance since payments are made when employees file health claims rather than on a monthly or annual basis. When healthy employees do not require extensive medical services, employers can retain more of their funds. This can provide significant savings in the long run, especially for small businesses that run on tight margins.

3. Encourage your employees to stay healthy

Since employers save money when healthy employees avoid unnecessary doctor's appointments, they are often more motivated to encourage good health under a self-funded health plan. This motivation can provide the necessary inspiration for innovations such as group stretching time before work, paid sick leave, and mental health days. Employees who are healthy are less expensive to retain, and they often demonstrate increased productivity and job satisfaction. Creating a healthy, supportive work environment that includes self-funded health plans can make your business a better place to work.

4. Avoid unexpected, overwhelming health claims

Some employers hesitate to provide self-funded health plans because they worry about becoming liable for large, overwhelming bills. It's true that certain ailments can cost tens of thousands of dollars in medical bills. Cancer, catastrophic accidents, and other major health events can all occur suddenly. However, employers who offer self-funded health plans have the opportunity to purchase stop-loss insurance to safeguard against these events.

Stop-loss insurance allows employers to set a per-person or per-year maximum for self-funded health plans. Health claims made beyond those limits will be funded by a stop-loss insurer, which can help small businesses remain solvent.

Reach out to a company like HealthEZ to learn more.