What You Need To Know About Self-Funded Insurance Options

As a business owner, you want to make financially sound decisions when it comes to employee benefits. In many cases, that excludes offering a fully paid commercial health insurance plan. However, there are a couple of self-funded options worth considering, such as captives and self insuring. eep reading to learn more about these programs.

Self-Insurance

In this situation, you will pay for health care costs as they occur. That can translate into serious savings in monthly premiums. There are a few drawbacks, though. You will probably need to hire an administrator to manage the plan, which increases overhead. Additionally, a few major claims in a short period of time can also drain resources from this type of plan, potentially making it unsustainable.

Captive Programs

Insurance captives are also self-funded, but they are run very differently. They operate as a subsidiary of a company, and administer all claims depending on that company’s needs and position. That offers a tremendous amount of control, something managers may appreciate. While there are up-front costs of establishing a captive, you may realize income from premiums and there can also be certain tax advantages to running them.

If you are considering a self-funded insurance option, be sure to carefully weigh captive vs self health insurance programs to see which one better fits your needs and financial situation.