What is the concept of self-funding?
In a self-funded contract, the employer adopts a plan document which outlines the benefit coverages and limitations of the group plan that are chosen by the employer. Rather than pay a monthly premium in advance to an insurance company for the coverage, the employer holds the premium and pays a smaller percentage of the total premium to an insurance company who will guarantee that individual and group claims do not exceed a predetermined limit. Eligible claims that are less than the predetermined individual and group limits are paid from the premium reserves which remain under the control of the employer.
