Self-Funded Health Plans

Self-funded health plans are insurance arrangements where an employer assumes the financial risk for providing health care benefits to employees, rather than paying a fixed premium to a traditional insurance company. The employer collects premiums from employees and uses those funds to pay for medical claims as they arise. This can lead to lower costs if claims are low but also means the employer must manage the financial risk and potential unexpected healthcare expenses. Many self-funded plans purchase stop-loss insurance to limit their risk on high-cost claims.