SELF-INSURED HEALTH PLANS

Your claims. Your data. Your Dollars.

Unlike fully-insured plans that lock your data behind the insurance company’s wall, self-funded plans let you pay claims directly, see exactly what’s driving cost, and keep the savings when claims run favorable. JS Benefits Group helps employers across the Mid-Atlantic and nationally evaluate readiness, structure stop-loss, and administer self-funded group health plans. Take control of your health plan — and your data.

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Of U.S. covered workers are in Self-Funded plans
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Typical starting group size for self-funding
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ERISA
Federal Framework Preempts State Mandates

Full
Claims Data & Plan Design Control

WHAT SELF-INSURANCE ACTUALLY MEANS

Self-funding isn't going without insurance. It's owning the plan.

The language trips people up. A self-insured plan still has insurance — stop-loss coverage caps catastrophic claims, a TPA processes payments, and your provider network is often the same one a carrier would use. What changes is who holds the risk and who keeps the savings.

The simple mechanics.

In a fully-insured plan, you pay a premium to an insurance carrier, and the carrier takes on all claims risk in exchange for that fixed premium. If claims come in low, the carrier keeps the margin. If claims run high, the carrier absorbs the loss — and prices next year’s renewal accordingly.

In a self-insured plan, you pay actual claims as they come in, rather than a flat premium. You contract with a third-party administrator (TPA) to process claims, a pharmacy benefit manager (PBM) to handle prescriptions, and a stop-loss carrier to cap your downside. When claims run low, the savings stay with your company.

In practice: A self-insured employer’s monthly cash outlay is the fixed cost (TPA fees, PBM admin, stop-loss premium) plus the variable cost (actual claims paid). Stop-loss caps the variable side so a catastrophic year can’t blow up the budget.

Roughly two-thirds of U.S. employees with employer-sponsored health insurance are in self-funded plans — it’s been the majority model for decades among large employers. What’s changed is that the floor has moved down: employers as small as 100 enrolled employees routinely self-fund today, and level-funded products have opened the door for groups even smaller.

The Five Components

What makes up a self-insured plan

1

Plan Document & SPD

ERISA-compliant plan document defining benefits, eligibility, appeals, and fiduciary framework. The SPD is what employees read.

2

Third-Party Administrator (TPA)

Processes claims, handles customer service, manages network access, and produces the monthly reports that make your plan transparent.

3

PBM (Pharmacy Benefit Manager)

Manages the drug benefit. PBM selection is one of the highest-leverage cost decisions in a self-funded plan — rebates, formularies, and contracting vary dramatically.

4

Stop-Loss Coverage

Specific stop-loss caps per-claimant exposure; aggregate stop-loss caps total plan claim exposure. This is what keeps self-funding manageable.

5

Network Access

Typically leased from a major carrier (BCBS, Aetna, Cigna, UHC) so employees retain the same network experience as a fully-insured plan.

BENEFITS AND TRADE OFFS

Why self-funding works - and where it gets hard.

Self-funding isn’t a universal answer. It’s a structural shift that creates real advantages and real obligations. Good advisors lay out both sides. Here’s the honest version.

The Upside

Why employers move to self-funded.

  • Full claims data transparency
    Monthly detailed reporting shows exactly what's driving cost — high-cost claimants, Rx trends, network leakage, utilization patterns. You can't manage what you can't see.
  • Savings stay with the employer
    When claims run favorable, the money doesn't become carrier profit. It stays on your balance sheet, funds future reserves, or returns to the benefit budget.
  • Plan design flexibility
    Not locked into carrier-standard plan designs. Add concierge navigation, direct primary care, centers of excellence, reference-based pricing — build the plan your workforce actually needs.
  • ERISA preemption of state mandates
    Self-funded plans operate under federal ERISA, which preempts most state-level mandated benefits, premium taxes, and rate-review requirements that apply to fully-insured plans.
  • Cost-containment ROI flows back
    Wellness programs, disease management, pharmacy carve-outs, and navigation services reduce actual claims — and the savings stay with you, not the carrier.
  • Monthly cost tied to your group
    Renewal conversations shift from "what's the market doing" to "what did our group actually experience." Your rates reflect you, not the carrier's entire block.

The Honest Trade-Offs

What employers need to understand.

  • Claim volatility is real
    Month-to-month claim spending fluctuates. Even with stop-loss in place, your cash flow profile changes from a fixed premium to a variable-plus-fixed model. Finance teams need to model this.
  • Fiduciary responsibility increases
    The plan sponsor becomes the ERISA plan fiduciary. That means documented processes for vendor selection, fee reviews, plan governance, and the legal responsibility that comes with it.
  • HR workload shifts, doesn't disappear
    Instead of managing a carrier relationship, HR manages a TPA, PBM, stop-loss carrier, network vendor, and compliance workflow. A good broker offloads most of this — but not all of it.
  • One bad claim year hits the P&L
    Stop-loss caps catastrophic exposure, but even a "normal-bad" year with high aggregate claims becomes visible on the financial statements in a way fully-insured never does.
  • Stop-loss renewals have their own volatility
    Specific stop-loss pricing reflects your own recent high-claim experience. A seven-figure claim in year two can reshape your year-three stop-loss quote. This is manageable but must be modeled.
  • Switching back is possible but not trivial
    Exiting back to fully-insured involves a run-out period, tail liability for incurred-but-not-paid claims, and a fresh underwriting exercise with new carriers. Not a decision to revisit annually.

HOW THE TRANSITION WORKS

From fully-insured renewal to first claim payment - the 9-month plan.

A voluntary benefits strategy only works if it’s actually engineered around your workforce’s specific gaps, communicated effectively, and supported through enrollment. Here’s how JSBG runs the process.

Our Framework

1

Claims Data & readiness analysis

Before any quoting, we model your claims experience, demographics, workforce stability, cash flow profile, and risk tolerance. Not every group is a fit — we'll tell you either way. Deliverable: a written feasibility memo with projected fixed/variable cost ranges and a go/no-go recommendation.

2

TPA, PBM and network selection

TPA selection sets the operating DNA of the plan — claims processing quality, member experience, and reporting depth. PBM selection is often the single highest-leverage cost decision. We run competitive procurements, negotiate performance guarantees, and align contracts with your cost-containment strategy. Deliverable: vendor recommendations with side-by-side contract comparisons.

3

Stop-loss placement and structure

Specific deductible selection (typical range: $25K–$200K depending on group size and risk appetite), aggregate stop-loss attachment, contract basis (12/12, 15/12, paid-basis, incurred-basis), lasers, disclosure — each of these levers affects both cost and protection. We quote the market, negotiate terms, and model multiple scenarios against your risk tolerance. Deliverable: stop-loss program recommendation with scenario modeling.

4

Plan documents, SPD, and compliance setup

Plan document drafting, SPD preparation, 5500 filing readiness, HIPAA privacy framework, COBRA administration coordination, ACA reporting integration (1094/1095), Rx coverage disclosures, and ERISA fiduciary governance. The compliance layer is what separates a well-run self-funded plan from a liability waiting to happen. Deliverable: complete plan documents, compliance calendar, and fiduciary governance framework.

5

Employee communications, launch and year-one management

Open enrollment, ID card distribution, employee education, payroll integration, and then the part that matters: ongoing claims analysis and quarterly reviews. Self-funding's value comes from actively managing the data, not just writing checks. JSBG reviews claims trends, high-cost claimants, Rx patterns, and network utilization every quarter — and builds next year's renewal strategy off what we actually see, not what the market assumes.

IS YOUR GROUP A GOOD FIT?

Six questions that tell us quickly.

Not every group belongs in a self-funded plan. The right candidates share a consistent profile — stable workforce, leadership comfort with variability, and claims experience that actually supports the move. If your group checks most of these boxes, self-funding deserves a serious look.

01

Are you willing to hold the plan for 3+ years?

Self-funding compounds. Year one is setup and baseline; year two is pattern recognition; year three is where cost-containment ROI meaningfully accrues. Groups that bounce in and out don’t capture the structural advantage.

02

Do you have 100+ enrolled employees?

Below ~100, claim data credibility gets thin and fixed costs weigh heavier. Between 100–250, self-funding works with disciplined stop-loss structure. Above 250, self-funding becomes the economically rational default for most groups.

03

Is your workforce relatively stable year-over-year?

High turnover makes claims experience harder to underwrite and increases administrative friction. Stable tenure creates credible data and lets wellness/navigation investments pay back over multi-year horizons.

04

Are you recent fully-insured renewals running 8+%?

If your fully-insured renewals are consistently high despite what feels like a healthy, low-claim workforce, you’re almost certainly subsidizing the carrier’s broader book. That subsidy is recoverable — it just requires seeing your own data.

05

Do you have leadership engagement on benefit strategy?

Self-funding rewards active management — quarterly claims review, cost-containment decisions, PBM renegotiation. It rewards CFOs and HR leaders who want to run their plan, not just administer a contract.

06

Does your finance team handle variable cash flow comfortably?

Self-funding replaces a fixed monthly premium with a fixed-plus-variable cost profile. If your CFO or finance team prefers strict cash predictability above all else, level-funded may be a better stepping stone than full self-funding.

HOW JSBG SUPPORTS YOU

We don't sell plans. We build and run them.

Self-funding is an operating model, not a product. The work doesn’t stop at placement — it starts there. Here’s what JSBG actually does for self-insured clients across the full plan year.

Feasibilty & Financial Modeling

Pre-transition claims modeling, projected fixed/variable cost ranges, stop-loss scenario analysis, and a written go/no-go recommendation. If self-funding isn't right for your group, we'll say so — and we'll show you the math.

TPA & PBM Procurement

Competitive RFPs, contract negotiation, performance guarantee structuring, and side-by-side comparison of claims processing quality, Rx rebate structures, reporting depth, and member experience.

Stop Loss Structuring

Specific and aggregate stop-loss placement, contract basis optimization, laser negotiation, disclosure review, and annual remarket. Stop-loss is where self-funded plans live or die — we treat it that way.

Plan Documents & ERISA Compliance

Plan document drafting, SPD preparation, 5500 filing coordination, HIPAA privacy framework, fiduciary governance setup, ACA 1094/1095 integration, and ongoing compliance calendar management.

Cost Containment Stratergy

Pharmacy carve-outs, direct primary care partnerships, centers of excellence, navigation services, reference-based pricing evaluation — we help employers identify which levers fit your group and implement them.

Quarterly Claims Review

The ongoing work that makes self-funding worth it. Claims trend analysis, high-cost claimant review, Rx pattern tracking, network utilization, renewal preparation 120 days out — not 30 days before.

ERISA



Federal Preemption

Self-funded plans operate under federal ERISA.

One of the most important structural advantages of self-funding is that your plan is governed by the federal Employee Retirement Income Security Act (ERISA), which preempts most state-level benefit mandates, premium taxes, and rate-review requirements that apply to fully-insured plans. For multi-state employers, this means consistent plan design across jurisdictions rather than a patchwork of state-specific variations.

That preemption doesn’t eliminate compliance work — it shifts it to the federal layer. Self-funded plans still must meet ERISA fiduciary standards, file Form 5500 annually (for large plans), comply with ACA employer mandate and reporting, administer COBRA, and maintain HIPAA privacy protections. JSBG manages the full federal compliance stack for our self-insured clients.

ERISA

FORM 500

ACA 1094/1095

COBRA

HIPAA

SPD/SMM

PCORI

RX TRASNSPARCY

QUESTIONS EMPLOYERS ASK

Self-funded FAQ.

Is self-insurance risker than fully-insured?
It’s a different risk profile, not a bigger one — if the plan is structured correctly. Stop-loss coverage caps your per-claimant and aggregate exposure. Your worst case is your aggregate attachment point, not unlimited liability. The month-to-month cash flow is more variable, but the annual maximum is bounded. For the right group, self-funded is often less risky than fully-insured over a multi-year horizon because you’re not exposed to carrier book-rate shocks.
What's the minimum group size for self-funding?
There’s no legal minimum, but practical floors are around 100 enrolled employees for traditional self-funding and 25–100 for level-funded (which is a lightweight self-funded structure with tight stop-loss and monthly renewals). Below 100 enrolled, fixed costs weigh heavier per covered life and claims data credibility gets thin. Groups between 50–100 sometimes use level-funded as a stepping stone.
Do employees know we're self-insured?
Most don’t notice — and they don’t need to. The ID card usually shows a familiar network name (BCBS, Aetna, Cigna, UHC), the provider experience is identical, and the TPA handles member service. The SPD does disclose the self-funded status as required by ERISA, but from the employee’s experience, a well-run self-funded plan looks and feels like a fully-insured plan — often better, because plan design can be more tailored.
How does stop-loss protect us?
Two layers: specific stop-loss caps exposure on any single claimant above a chosen deductible (typical range $25K–$200K depending on group size). Aggregate stop-loss caps total plan-year claims at a multiple of expected claims (typically 125% of expected). Together, they create a predictable maximum annual liability. You know at the start of the year what your worst case looks like, and stop-loss reimburses you when claims exceed those thresholds.
Does self-funding save money every year?

No — and any broker who tells you it does is overpromising. Self-funding creates conditions for long-term savings by giving you data transparency, plan flexibility, ERISA preemption, and cost-containment leverage. Individual years vary based on actual claims. Across a 3–5 year window, most well-matched groups see meaningful structural savings versus the fully-insured alternative — but a single high-claim year can still be expensive.

What happens if we want to switch back to fully-insured?

You can, but plan the timing carefully. You’ll need to handle run-out — claims incurred during your self-funded period but paid after you return to fully-insured — typically 12–24 months of runoff exposure. You’ll also go through new fully-insured underwriting, and carriers will want to see your self-funded experience. Switching back is manageable with a well-prepared broker, but it’s not a casual decision.

What's our fiduciary liability?
As the plan sponsor of a self-funded ERISA plan, your organization is the named fiduciary — responsible for prudent vendor selection, reasonable fees, documented governance, and acting in participants’ best interest. This is similar to 401(k) fiduciary responsibility. Best practice: document your TPA/PBM selection process, review fees annually, maintain an investment-policy-like benefits policy statement, and consider fiduciary liability insurance. JSBG helps clients establish and maintain proper fiduciary governance.
How long before we see results?
Year one is baseline setup — you’re running the plan, collecting data, and establishing vendor relationships. Year two is when pattern recognition kicks in — you see claim trends, identify cost-containment opportunities, and start to see where the plan design can be tightened. Year three is where ROI on cost-containment and wellness investments typically accrues meaningfully. Groups that hold the structure 3–5 years capture the structural advantage; groups that bounce in and out don’t.
When should we start evaluating self-funding?
9–12 months before your target effective date. Feasibility analysis, TPA selection, PBM procurement, stop-loss quoting, plan document drafting, and open enrollment all take time to run properly. A rushed self-funded transition is a risky self-funded transition. If your renewal is in January, start the conversation by the prior April. The second-best time is now.

NEXT STEP - READINESS REVIEW

Is self-funding right for your workforce? Let's find out.

A focused review of your current plan, claims experience, workforce profile, and cash flow tolerance — with a written feasibility recommendation. No sales pitch, no pressure. If self-funding is the right move, we’ll tell you how to get there. If it’s not, we’ll tell you what is.

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