Should my business self-Fund?

Piggy bankYour Business Can Self-Fund

A growing number of businesses and insurance trusts are proving that a self-funded health insurance plan can be a cost-effective alternative to the traditional fully-insured approach. When your business self-funds, you are taking on the responsibility – as well as the risk and rewards – of paying the medical and prescription drug claims of enrollees.


Three out of five covered workers in the U.S. are covered by some type of self-funded medical plan.

4 of 5 people
3 of 5 people

Among employers with 200 or more employees, that jumps to four out of five employees.

Comparing of Funding Self-Insured and Fully-Insured Health Benefit Plans


Coverage is contracted by employer or through an employer cooperative, like The Alliance. 

Active Human Resources role; often have an internal benefit administrator

Craft plan design and pick provider network

Pay claims via a third-party administrator (TPA) either as incurred or by monthly deposits of expected or maximum costs into an account 

The business assumes the risk, and purchases stop-loss insurance to protect against catastrophic claims, but also keeps the difference, including interest income 

Full access to claims and pharmaceutical data 

Employer crafts plan design, co-pay, deductible, etc.

Plan must meet federal (ERISA) standards

Employer chooses provider network

Full access to claims and pharmaceutical data.


Coverage is purchased from an insurance carrier. 



Minimal administrative role

Plan design and provider network come from the insurer

Pay premiums

Higher fully-insured premiums cover the risk and generate profit for the insurance company

Plan and premiums revisited annually or when term ends and are based on: 

  • Employee group size 
  • Claims experience 
  • Carrier’s desired profit margin 

Employer is limited to insurer’s plans that were filed with and approved by the state.

Plan must include state mandates

Plan design and network determined by insurer

Limited access to claims data

What Your Business Can Gain From Self-Funding

With self-funding you get:

With self-funding you get:
Control Access to Data Cost Management Flexibility Strategy



You make the big decisions about employee benefits, including benefit levels, co-pays and deductibles.

Access to Data

pie chart

You own your data. You can use it to manage your plan and guide your decisions.

Cost Management

The insurer's profit margin is eliminated, so you gain the rewards of a well-managed benefit plan.



You can design a plan to match the needs of your employees and your organization. Self-funded plans are governed by federal rules, not state mandates, so one plan design can be offered in many states.



You choose what steps to take to get more health – and better health care – for your money.

Click the chart for details!

Self-funded benefits for 75 – 250 employees?
It’s simple.

Single Source self-funding the allianceSingle Source Self-Funding from The Alliance is designed for employers who are self-funding for the first time. Single Source Self-Funding creates a seamless transition from fully-funded to self-funded benefits with a package of essential services. A self-funding best practices blueprint and a dedicated implementation team smooth your way to self-funding success.

Should your business self-fund?

Business Voice July 2016

Answering 10 questions can help you decide. Read the Wisconsin Business Voice article written by Cheryl DeMars, president & CEO, The Alliance.

More Information About Self-Funding

Online documents

The Alliance annual offers courses and webinars on basic and advanced self-funding topics.

The Self-Insurance Institute of America (SIIA) offers resources and answers your questions about self-funding.

What Industries or Businesses Self-Fund?

Self-funding is an option for businesses, municipalities, school districts, unions, Taft-Hartley insurance trusts and other organizations. Get a picture of what self-funding means – and who is using it – with our infographic. Businesses in a wide variety of industries can benefit from self-funding.

Alliance Members by Super Sector

Manufacturing - 27% Wholesale Trade - 11% Retail Trade - 8% Finance and Insurance - 7% Professional, Scientific and Technical Services - 7% Educational Services - 6% Construction - 5% Health Care and Social Assistance - 5% Other Industries - 23%

Manufacturing - 27%


Wholesale Trade - 11%


Retail Trade - 8%



Finance and Insurance - 7%


Professional, Scientific and Technical Services - 7%


Educational Services - 6%

Construction - 5%


Health Care and Social Assistance - 5%


Other Industries - 23%


Alliance Lives by Super Sector

Manufacturing - 34% Educational Services - 15% Public Administration - 11% Retail Trade - 9% Health Care and Social Assistance - 6% Finance & Insurance - 6% Wholesale Trade - 5% Other Industries - 10%

Manufacturing - 34%


Educational Services - 15%

Public Administration - 11%

Retail Trade - 9%


Health Care and Social Assistance - 6%


Finance & Insurance - 6%


Wholesale Trade - 5%


Other Industries - 10%

Learn More About What Businesses Should Self-Fund

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