Insights
Establishing a self-funded plan
Once a decision has been made to self-fund its health plan, there are several steps an employer should take, regardless of whether it is establishing a new plan or transitioning from a fully-insured plan.
- Appoint fiduciaries who will act in the best interest of the plan and its participants.
- Secure stop-loss coverage. Stop-loss coverage is essential to protect the company’s (or, if applicable, the trust’s) assets against catastrophic claims.
- Prepare a health plan document.
- Contract with a TPA. When selecting a TPA, consider whether the vendor:
- Accurate and timely processing of claims, including systems for detection of errors, duplicate charges, fraudulent charges, and a comprehensive auditing and recoupment process.
- Access to a broad network of medical providers.
- Quality and cost data that allows members to make informed choices.
- Cost control programs, such as case management and disease management.
- Compliance support, such as drafting and distribution of summary plan descriptions (SPDs) and summaries of benefits and coverage (SBCs).
- Non-discrimination testing
- Consider fiduciary liability insurance to protect your assets in the event of error, breaches of federal law, or fraud on the part of your fiduciaries or administrative agents.
