Self-funded health insurance is quickly becoming a go-to option for business owners tired of watching premiums climb with no end in sight.
If you’ve ever opened your company’s renewal notice and felt that familiar churn in your gut, you’re not alone. Rising health insurance costs are one of the biggest pain points for employers – and too often, it feels like there’s no way around them.
But self-funded health insurance offers something different. It’s not just about lowering costs – it’s about building a plan that actually fits your team and your business.
Self-funded health insurance gives you control. And, as you build out your broader risk management and benefits programs, it allows you to tie benefits into long-term cost strategies. That’s not to say there’s no risk with self-funded plans – there certainly is – but if the situation is right, you can get tremendous value out of self funding.
Here’s what you need to know.
Interested in learning more? Check out our webinar replay! In it, we cover the pros and cons, common misconceptions, and long-term benefits of self-funded employee health benefits, offering a practical guide for small to mid-sized employers.
When it comes to offering group health insurance, most business owners start with what’s familiar: fully insured plans. They’re easy to set up, and on the surface, they seem like the safe play. And when you’re small – think, less than 7 or 8 employees – these plans can work well.
With a fully insured plan, you pay a fixed premium to the insurance carrier for each employee. The carrier handles claims and takes on the financial risk. For many businesses, that predictability feels like peace of mind.
But here’s the catch: you’re often paying for coverage your team doesn’t even use. If your employees are healthy and claims are low, the insurance company keeps the savings – not you. And when premiums rise (as they almost always do), you’re stuck with the bill or forced to pass the cost onto your team.
That’s where self-funded health insurance flips the script.
Instead of handing over a large premium every month, you only pay for care when your team actually uses it. You still work with a third-party administrator (TPA) to process claims and manage networks, and you add stop-loss insurance to protect against big, unexpected costs.
You’re not alone in the process – but you are gaining more control.
Learn other ways we can help you manage your businesses health insurance costs.
One of the biggest advantages of self-funded health insurance? Improved cash flow.
Keeping funds in your business and using them as needed helps you avoid overpaying for unused coverage. That liquidity can be reinvested into your team, operations or long-term strategy.
But savings are just the beginning. When you make the switch to self-funding, you also gain:
While self-funded health insurance is a great option, it’s not for everyone – and that’s okay. It is worth exploring if:
Bonus: If you’re not quite ready for full self-funding, level-funded plans offer a hybrid model. These have become increasingly popular with small and mid-sized employers because they offer predictability with some of the flexibility of self-funding.
Like anything in business, self-funding isn’t risk-free.
Sure, a year with low claims can bring big savings – but without smart planning, one high-cost claim can throw your budget off track. Self-funded plans also come with more moving parts. Without the right support, the administrative side can quickly start to feel overwhelming.
The good news? You don’t have to figure it out on your own. You can stay ahead of the risks while maximizing the reward by making sure to have:
Here’s the part most brokers won’t tell you: Your benefits plan doesn’t live in a vacuum.
At Ellerbrock-Norris, we look at employee benefits as one piece of your larger risk puzzle. That’s why your self-funded health insurance strategy should align with areas like:
A well-run self-funded plan doesn’t just save you money – it protects your purpose. It becomes a lever for growth, culture and valuation.
We get it. Shifting from a fully insured model can feel overwhelming. But you don’t have to go it alone.
Whether you’re just starting to explore self-funded health insurance, or you’re ready to take your current plan to the next level, we’re here to help you evaluate the risks, model the options and build a benefits strategy that works for you – today and in the long run.
Think it’s time to make a change? Let’s talk.