The benefits you need.
The cost savings you want.
The transparency you dream of.

Questions asked and answered about self-funding

Why should my company self-fund?

As healthcare costs continue to spiral out of control, employers are increasingly looking to self-fund their employee healthcare benefits. They’re tired of one-size-fits-all insurance policies and are seeking more flexible, cost-effective alternatives.

How do self-funded health plans work?

A self-insured health plan is one in which your company assumes responsibility for providing healthcare benefits to your employees. A self-funded plan is not health insurance in the sense that you pay premiums to a commercial insurance carrier and they administer the plan. Instead, your company sets up a fund for your employees’ healthcare claims and hires a third party administrator (TPA) like MagnaCare to administer it.

Where do the costs savings come in?

Self-funded plans reduce your premium costs right off the bat, immediately saving you 2 to 3% on the cost of the plan. Self-funded plans are also preempted by ERISA from paying state mandate costs. Most important: You pay only for the healthcare services your employees actually use, rather than a fixed monthly premium. If eligible medical claims for a year do not exceed your plan’s predetermined limit, the plan can keep those dollars to offset the subsequent year’s funding.

How do I know how much money to set aside? And what about the risk involved?

Working with MagnaCare’s team of actuaries, you’ll be able to determine the level of coverage you require. And you’ll purchase stop-loss insurance to cover unanticipated high claims costs at the individual and/or aggregate level.

What are other advantages to a self-funded health plan?

Fully insured plans offered by health insurance companies can be inflexible—no changes allowed. With a self-funded health plan administered by MagnaCare, you’ll have the freedom to choose copay amounts, deductible amounts, and covered services—even make changes mid-year. For example, during the COVID pandemic, plan sponsors were able to add telehealth services for their health plan members.

What happens to my company’s health claims data?

You own it, so it’s yours. You’ll have full access to claims data, which allows you to make targeted decisions that can improve your employees’ healthcare and control costs.

What about my fixed costs?

If you are not ready to make the leap to self-funding, we offer a middle ground option to help you ease into self-funding: our level-funded health plans. MagnaCare’s level funded health plan combines the predictability of a fully insured plan with the cost savings of a self-funded health plan.  With this arrangement, you make fixed monthly payments but have more control of your health plan and significantly less premium tax. But don’t worry about overpaying: You’ll receive money back in case of excess claim funding.

I hear self-funding doesn’t work for companies with fewer than 250 employees?

Big and small businesses alike gain several advantages through self-funding, including money-saving benefits and greater flexibility. Smaller businesses are more concerned about catastrophic claims, but purchasing stop-loss insurance protects you.

Third Party Administrators work for you

TPAs like MagnaCare work with the help of their actuaries to assist you in determining the level of coverage you need.  Unlike traditional insurance companies, they don’t drop or reject claims or make arbitrary plan changes.  It’s in their best interest to clear up red tape—a chief employee complaint about traditional insurance—rather than create it.

Learn More >

Call 866-250-8679 to see how much money
your company can save by self-funding your health benefits!

See how much your company can save by self-funding your health benefits

See how much your company can save by self-funding your health benefits