Self-Funded Health Plans · Indiana
A self-funded plan means the employer pays employee medical claims directly instead of buying coverage from a carrier. Stop-loss insurance caps the risk, and the employer keeps the savings when the group runs healthy.
It's how most large employers fund benefits, and increasingly mid-size ones. Our flagship client has saved $8.9 million over six years by self-funding the right way.
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How It Works
A self-funded plan isn't one product. It's a set of components the employer controls. Understanding each is how you find the savings a carrier keeps for itself.
Before You Switch
Self-funding is powerful, but it isn't automatic savings. These are the four pitfalls that turn a good idea into a bad year. All avoidable with the right setup.
Claims don't arrive evenly. A heavy quarter can strain cash if the plan isn't funded and reserved correctly. Modeling worst-case cash flow up front is non-negotiable.
Self-funding is only safe if the stop-loss contract is right. The wrong basis, surprise lasers, or no rate cap can expose you to claims you thought were covered.
The savings come from active oversight: pharmacy, large claims, and trends watched weekly. A broker who shows up only at renewal leaves the savings on the table.
Below roughly 50 employees, claims volatility can outweigh the upside. A level-funded plan often bridges the gap with similar transparency and far less swing.
FAQ
A self-funded (or self-insured) health plan is one where the employer pays employee medical claims directly out of its own funds instead of paying fixed premiums to an insurance carrier. The employer hires a third-party administrator to process claims and buys stop-loss insurance to cap catastrophic risk. When the group's claims run lower than expected, the employer keeps the savings rather than handing unused premium to a carrier.
On a fully insured plan, any premium your group doesn't use becomes the carrier's profit. On a self-funded plan, that surplus stays with the employer. You also gain access to your own claims data, which lets you manage pharmacy spend, negotiate directly with providers, and adjust the plan based on what's actually driving cost. The savings come from transparency plus active management, not from the funding model alone.
The risk is real but bounded. Stop-loss insurance caps your exposure on both individual large claims and total annual claims, so your worst case is defined before the year starts. The larger risk for many employers is staying fully insured and never seeing where their premium goes. Continuous claims oversight is what keeps a self-funded plan predictable.
Self-funding works for most employers with roughly 50 to 1,000 employees. Below 50, claims volatility can outweigh the savings, and a level-funded plan usually makes more sense. It offers similar transparency with a fixed monthly payment. We model both against your current plan before recommending a direction.
A self-funded plan has variable monthly costs that track real claims, with stop-loss bought separately. A level-funded plan bundles expected claims, administration, and stop-loss into a single fixed monthly payment, and refunds a share of unused claims dollars at year end. Level-funded gives smaller employers self-funding's transparency and upside with steadier cash flow.
Yes. Burt Advisory is based in Elkhart, Indiana and designs and manages self-funded and level-funded plans for school systems, municipalities, manufacturers, and other Indiana employers. We model the funding options, place stop-loss, run cost containment, and monitor claims continuously through the United Benefit Advisors network.
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