SELF-INSURED HEALTH CARE PLANS

The Growing Movement Toward Self-Insured Health Care Plans

As employers grow increasingly frustrated with the compounding effect of annual health care renewal increases, many find long-term value in self-funded health plans. While managing employee medical claims directly may seem complex—especially for small and mid-sized companies—the process is more manageable than it appears. Self-funding can deliver significant financial and operational benefits with the right administrative partners and strategic guidance.

As the name implies, self-insured (or self-funded) plans shift the financial responsibility for a portion of employees’ health care claims to the employer. To protect against high-cost claims, stop-loss insurance sets specific limits on the employer’s liability, with the insurer absorbing costs beyond those thresholds. By moving from a fully insured health plan to a self-funded model, employers can eliminate or reduce several built-in expenses, such as carrier profit margins, risk pooling charges, state premium taxes, and pharmacy benefit management fees. Most importantly, employers may save significantly when actual claims fall below the fixed premiums typically paid under a fully insured arrangement.

One of the most common concerns for those new to self-funding is exposure to large claims. This is a valid consideration, especially given the continued rise in health care costs and the increasing frequency of high-dollar claims. However, recent data shows that approximately 67% of covered workers—particularly in large employer groups—are enrolled in self-funded health plans. Historically, these plans were favored by large employers with the scale and financial stability to absorb risk. But today, a growing number of solutions are helping bring these benefits down market.

For employer groups in the 50–500 employee range, we are seeing significant momentum toward self-funding. One increasingly popular strategy is group self-funding (employee benefit captives/consortiums)—self-funded pools of like-minded employers who band together to share risk and face market dynamics as one large group. Group Self-funding reduces costs by leveraging vendor partnerships and pharmacy benefit managers, allowing participating groups to gain purchasing power for stop-loss contracts that provide long-term protection.

Another entry point into self-funding is level-funded plans, which offer employers a predictable monthly expense while maintaining some of the advantages of self-insurance. These are ideal for employers looking to ease into the model with less volatility.

Patriot Growth Insurance Services (Patriot) offers exclusive access to custom stop-loss policies through our partnerships and proprietary solutions. These include premium caps and laser restrictions available in perpetuity—a game-changer for many small and mid-sized employers who previously viewed self-funding as out of reach. This expanded access is helping shift the narrative around self-funded insurance, positioning it as a viable and strategic option for a wider range of businesses.

Self-funding also offers flexibility in plan design and exemption from many state insurance mandates, allowing employers to tailor benefits more closely to their workforce’s specific needs. Additionally, employers gain greater access to their claims data and utilization trends, enabling more informed decisions and ongoing program improvements.

Patriot’s experienced consultants work closely with employers to assess the viability of self-funding, analyzing healthcare costs, employee demographics, claims history, risk tolerance, and long-term budgeting goals. We develop tailored strategies using best-in-class solutions, including proprietary products, claims administration, network analytics, employee communication, compliance guidance, and vendor partnerships.

As healthcare costs continue to rise, more employers are exploring self-funding not just as an alternative—but as a smarter, more strategic path forward. Connect with a Patriot consultant today to find out whether it’s the right fit for your organization.

Contact Patriot at contact@patriotgis.com.