What is a self-funded plan?

A self-funded plan, also known as a self-insured plan, is a health plan where the employer assumes the risk for paying health claims as opposed to purchasing an insurance policy from an insurance carrier, where the insurer assumes the risk.

With a self-funded plan, the company could save the profit margin that an insurance carrier adds to its premium. However, the downside is that the company is responsible for paying out claims itself and the potential risk is larger. Many employers purchase stop-loss insurance to mitigate this risk.

A level-funded plan is a type of self-insured plan wherein the employer pays a steady fee each month. For ACA Compliance purposes, these types of plans are treated the same.

Self-Funded Plans and Minimum Value Coverage

If a company has a self-funded plan, they cannot rely on a carrier to tell them whether a plan provides minimum value and they will need to make that determination themselves. The Department of Health and Human Services (HHS) provides an online Minimum Value Calculator, along with instructions, that companies can use to determine whether a self-funded plan meets the MVC standard.

Preparing for ACA Compliance

Using Zenefits ACA Compliance for a self-funded plan requires the administrator to review additional information about dependents enrolled in coverage.

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