Self Funding > How Self Funding Works

Instead of a fully–insured plan, an employer sets up a self–insured plan:

Since claims are cyclical, carry–forward of the reserve amount is critical. The employer can earn tax–free income on the funds set aside in trust, which remain an asset of the employer, rather than profit for an insurer.

Stop loss insurance is arranged to protect the plan from catastrophic claims. The amount of risk to be insured will be a function of many factors:

The plan document is prepared, which contains all the provisions of the plan:

A third-party administrator (TPA) operates the plan, including:

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