A self-funded health plan requires the employer to become the insurer. Most often, employers will partner with a PPO to provide services for the plan. A third party (a TPA) is engaged to handle claims and processing. Because self-insured employers run the risk of large catastrophic claims, they will purchase stop-loss insurance to protect them in such an event. Even with the additional expense of stop-loss insurance, employers benefit greatly from a significant savings, increased cash flow, tax advantages and more control over the benefits the plan offers.
With healthcare reform and the rise in healthcare costs and premiums, employers are finding self-insured funding to be a favorable option in saving thousands in premiums along with many other benefits. Today, self-insured plans are considered to be good options for both small and large employers.
A Flexible Spending Account is a cafeteria plan under Section 125 of the tax code. It is a tax favored savings account funded solely by the employee through regular pre-tax payroll deductions. The funds (account) can be withdrawn tax-free to pay for eligible medical, dental, vision, prescription and dependent daycare expenses. Employees elect how much they want withdrawn from each pay period, which can be changed annually or upon a qualifying event such as marriage or divorce. The average working employee in America spends more than $1,000 annually on these types of benefits. By participating in a FSA, an employee's taxable income is reduced, which increases the percentage of pay they take home.
Employee Non-Traditional Health Plans (Cafetera, Tax- Favored & Other Plans)
To determine if a self-insured plan is right for your company, please contact Snowden and Associates for a detailed analysis and of your existing plan.
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