Benefits of Partially Self-Funded Health Insurance Plans

In certain states, partially self-funded health insurance plans are an option for business owners. In some cases, it has the possibility of bringing lower health insurance costs.

Partially self-funded health insurance plans are similar to standard health insurance, but there are a few key differences. Four main differences include: the ability to be medically underwritten, they can be less expensive, the plan includes a reserve account for medical bills, and the unused funds from the reserve can be kept. This plan is typically geared towards businesses with employees who see the doctor on a rare basis. Because of this, there is the potential to save money.

Though this plan is very similar to a standard insurance plan, there are benefits that might sway a business to pursue this option. 

  • Qualifies as major medical insurance and protects employers and employees from possible tax penalties for not having or providing health insurance
  • Must cover all essential health benefits according to the law
  • Premiums are usually tax deductible
  • Monthly costs can be based on the health of the group
  • Part of the monthly premium are stored in a reserve account
  • Money in the reserve account is used to pay medical claims should they arise
  • At the end of the year, the money in the reserve account is refunded or redirected to pay for the next year's premium

Finding out which health insurance plan to use can be challenging for business owners, but there are many options to choose from. The most important thing is to choose the one that works best for your business.