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Self-funded health care insurance plans offer an alternative to traditional health care models.
In a self-funding model, the company is responsible for covering all claims in the health care
plan, and controls any premium reserves. Because these plans are excluded from some
requirements of the Affordable Care Act (ACA), employers can save costs related to premium
taxes and state insurance regulations.
Self-Insured
Coverage
• The employer provides minimum value coverage that meets affordability requirements
• Self-insured are not subject to some of the ACA benefit reforms.
• With no annual or life-time dollar limits on essential health benefits covered under the
plan, employers may need to consider an appropriate level of stop-loss coverage.
Compliance
• The employer will be able to avoid some of the ACA provisions, such as essential
health benefits, insurer tax, medical loss ratios (MLR) and deductible limits.
• The employer will need to comply with all applicable federal and state laws and rules,
including the some of the new ACA provisions
• Employer needs to be aware of all the ACA compliance requirements, specifically the
benefit mandates, and grandfathering if applicable, that directly affect them.
• The employers must notify employees regarding the availability of the Health
Insurance Marketplace and subsidies that could help lower the cost of insurance
coverage (by October 1, 2013, and for all new employees at the time of employment).
Tax Credits
• Employers will not be eligible to receive tax credits.
• Employees may be eligible to receive tax subsidies through the Individual Exchange if
their employer’s coverage does not provide affordable, minimum value coverage.
Administration • The employer will continue to use their current practices to work with issuers to
obtain and maintain coverage.
• Starting in 2016, the employer will submit required reporting to the Internal Revenue
Service.
Employee
Tools and
Resources
• Employees will use current practices for open enrollment and select from the
available health plan choices that are made available by the employer.
• Employees may use a single seamless process to obtain a full benefits package
including voluntary benefits.
Supplemental
Insurance
Protection
• The employer can provide voluntary benefits to workers along with the self-funded
plan for comprehensive coverage.
• These policies can be bought separately to help employees to covvver out-of-pocket
costs associated with illness or injury.
Penalties
• Starting in 2015, employers with 100 or more full-time equivalent employees may
be subject to shared responsibility penalties if coverage either does not meet
affordability or minimum value requirements, and is offered to fewer than 70 percent
of its full-time employees and the dependents of those employees (unless the
employer qualifies for 2015 dependent coverage transition relief).
• In 2016, the 70 percent threshold is increased to 95 percent and the shared
responsibility penalties will also apply to employers with 50 or more full-time
equivalent employees.
Self-Insured
