What is “self-funding”?
A. Self-funding is an arrangement in which an employer (or a trust fund sponsored by a group of employers) assumes some or all of the risk of a Health and Welfare plan. Self-funding is an alternative to traditional health insurance, and claims are paid directly from the plan sponsor’s funds. A professional third party administrator (TPA) handles administrative functions. Employers and trust funds self fund their benefit plans because it offers more flexibility in plan design, administrative procedures, managed care choices and can be advantageous from a cash flow standpoint. Q.
