Self-Funding: Taking Control of an Employer’s Health Benefits Destiny Under the Patient Protection and Affordable Care Act

Abstract

In an era of rising health insurance costs and new mandates built into federal reform, employers of all sizes are discovering the advantages of controlling their own destinies with self-funded ERISA (Employee Retirement Income Security Act) health plans. With a large pool of employees, employers could expect to save about 10% by paying medical claims directly rather than purchasing fully insured coverage. The key is to pick the right partners, address outlier risk with stop-loss insurance and rigorously control costs.