Self Funded Plans
What Is a Self-Funded Plan?
How Self-Funded Medical Plans Actually Work
In a Self-Funded Health Care Plan, the employer provides health or disability benefits to employees using the company’s own funds. With a self-funded medical plan, your business takes a more direct role in paying for employee healthcare, while still putting protections in place to manage risk. Instead of paying a fixed premium to an insurance carrier, you fund claims as they happen, with expert partners handling administration and safeguards. Here’s how it works, step by step:
- The employer sets aside a dedicated claims fund
Your business establishes a healthcare fund used specifically to pay employee medical claims. Rather than prepaying for unused coverage, you’re paying for real healthcare costs as they occur. This gives you more control over cash flow and the opportunity to keep unspent dollars. - Claims are paid as they’re incurred
When employees receive care, claims are submitted and paid from the claims fund. Payments typically happen on a weekly or regular reimbursement schedule, creating predictable cash flow instead of large, fixed monthly premiums. - Stop-loss insurance protects against large or unexpected claims
To limit financial risk, self-funded plans are paired with stop-loss insurance. This coverage protects your business if a single claim becomes very expensive or if total claims exceed a set threshold for the year. Stop-loss ensures that worst-case scenarios don’t derail your budget. - A Third-Party Administrator (TPA) manages the plan
A TPA handles the day-to-day operations of the plan, including:
- Processing claims
- Managing provider networks
- Ensuring compliance
- Providing reporting and insights
Unlike a traditional insurer, a TPA doesn’t assume risk—they administer the plan on your behalf, giving you transparency into where healthcare dollars are actually going.
- The employer retains control and visibility
Because your business funds the plan, you gain access to detailed claims data and reporting. This insight helps identify cost-drivers, evaluate plan design, and make smarter decisions year over year, something fully insured plans rarely offer.
In short, self-funded medical plans combine pay-as-you-go flexibility, built-in risk protection, and professional administration, giving Utah employers more control without taking on unnecessary exposure.
Who Is This Best For?
Some employers chose self-insured because it makes them more aware of their risks. Self-funded medical plans aren’t a fit for every employer, but for the right businesses, they can unlock meaningful savings, flexibility, and long-term control. Here are some businesses that may find self-funded medical plans particularly helpful:
Employers with enough scale to spread risk
Self-funded plans tend to work best for mid-sized and larger employers. While some smaller groups can self-fund, companies with 50+ employees generally have enough participation to smooth out claims variability. Larger employee populations make costs more predictable and reduce the impact of any single high-cost claim.
Organizations with stable or favorable claims history
Employers that have historically experienced moderate or lower healthcare claims are often strong candidates for self-funding. If your workforce is relatively healthy or your claims trend has been stable year over year, self-funding allows you to benefit directly from that performance instead of subsidizing higher-risk groups through pooled premiums.
Businesses with consistent cash flow
Because claims are paid as they occur, self-funding works best for companies that can manage variable monthly expenses. You don’t need unlimited resources, but you do need the ability to handle normal fluctuations in claims spending.
Industries with predictable utilization patterns
Some industries are naturally better suited to self-funding than others. Professional services, technology, manufacturing, and office-based employers often see more predictable healthcare usage than industries with high injury rates or seasonal workforce swings. That said, industry alone doesn’t disqualify a business—it simply helps set expectations.
Employers who want transparency and control
Self-funding is especially appealing to businesses that want insight into where their healthcare dollars go. If you value detailed claims data, plan design flexibility, and the ability to actively manage costs instead of accepting carrier-driven increases, self-funding can be a powerful alternative.
For employers that are smaller, highly seasonal, or prefer fixed monthly costs, level-funded or fully insured plans may be a better fit. A side-by-side evaluation helps determine which funding model aligns best with your goals, risk tolerance, and budget.
Benefits of Self Funded Health
Self-Funded vs. Fully Insured vs. Level-Funded Plans
When choosing a health plan, most employers are really choosing a funding model. Understanding these differences makes it easier to choose the right fit for your business.
| Features | Fully Insured | Level-Funded | Self-Funded |
|---|---|---|---|
| How costs are paid | Fixed monthly premium | Fixed monthly payment with claims fund | Pay claims as they occur |
| Risk level | Lowest (carrier assumes risk) | Moderate (limited employer risk) | Higher (employer assumes risk, with stop-loss) |
| Cost predictability | High | High | Moderate |
| Upside savings potential | None | Possible surplus refund | Full benefit of lower claims |
| Taxes & carrier fees | Highest (state premium taxes + carrier margins) | Reduced vs. fully insured | Lowest (no premium taxes, fewer embedded fees) |
| Plan design flexibility | Very limited | Some customization | Highest level of control |
| Claims transparency | Minimal | Partial | Full access to claims data |
