In a fully-insured plan, an employer pays a fixed premium and the carrier keeps whatever isn't spent on claims. In a self-funded plan, the employer pays for its own members' actual claims, and keeps the savings when care is managed well.
That one change is the whole point. When you pay real claims instead of a fixed premium, you can finally see where the money goes, and act on it. Self-funding is what lets a plan benchmark prices, reward better-value care, and pass savings back instead of handing them to a carrier.
A predictable monthly cost covers claims, administration, and stop-loss, set in advance.
A licensed third-party administrator processes and pays claims.
Insurance caps the risk if claims run unusually high.
Money not spent on claims stays with the plan, not a carrier.
The worry with self-funding is the unexpected: one very sick year. Stop-loss insurance exists exactly for that. It works in two layers, and PR Health shops it across carriers.
Caps the cost of any one member's claims.
Caps the cost of everyone's claims combined.
Heights are illustrative. Specific stop-loss protects against a single catastrophic claim; aggregate protects against many claims adding up. Together they turn an unpredictable risk into a known, capped maximum.
A fair question: if the employer pays the claims, can they see who's sick? No. The law requires a firewall between the people who manage the plan's money and members' protected health information.
Protected health information sits behind the firewall with the TPA and clinical partners. The employer sees the numbers it needs to run the plan, never an individual's health details.
Why Rx and provider-administered drugs get expensive, and where the cost can come out.
