General Inquiries

Self Funding Health Insurance Programs

  • 1.  Self Funding Health Insurance Programs

    Posted 11-16-2018 11:11
    Has anyone had any experience with self-funded health insurance programs?  We are considering it as an option and I was curious if anyone had any insight on how effective they were in cutting down on expenses and supporting the employees.  Also any tips or traps to be aware of in the discussion with the provider would be appreciated.  We have about 200 employees & dependents in our insurance pool.

    Thank you in advance for you assistance.

    Charles Lovelace
    CFO - Environmental Action, Inc.
    8526 S. Peoria Ave.
    Tulsa OK 74132
    Office: (918) 298-4080

  • 2.  RE: Self Funding Health Insurance Programs

    Posted 11-16-2018 12:27
      |   view attached

    There are both upsides and downsides to self-funded plans, and it all depends on having the crystal ball and predicting the future of claims and increasing the liability of large claims.Even if it isn't to talk about our company specifically, I'd be more than happy to get on a phone call or email chain with you and either answer questions, or provide you with companies that are currently in the self-funding as well as GDP's program to discuss their experiences.

    There are programs and strategies that we use at GDP that combines the self-funded data and predictability, but also provides the protection if your organization has a catastrophic year. To give you an example of our success, our clients are paying the same for their health insurance as they were in 2013.

    Feel free to call or email me at the information below, and once again, if you don't want to discuss GDP specifically, we can have a general conversation without going into a sales pitch.

    Parker Pennington
    GDP Advisors

    Parker Pennington
    Healthcare Adviser and Consultant
    GDP Advisors
    McKinney TX


    GDP - One Pager.pdf   828K 1 version

  • 3.  RE: Self Funding Health Insurance Programs

    Posted 11-17-2018 08:15
    Edited by Jerry Whitaker 11-20-2018 05:22
      |   view attached
    ​It depends on your employee number, employee age, demographics & health and risk tolerance level. The "magic number" depends on the probability that actual health care expenditures exceed 125% of "expected expenditures". The employee number has a direct impact on the probability. A employer with 50 employees has a 25% chance of claims exceeding 125% versus and employer with 400 employees has less than 5%. The overall age, demographics and health will impact this as well.

    The risk tolerance level is based on the above information to make a decision on a lower or higher risk alternative for the attachment point and maximum for exposure.

    Below are some Stop-Loss Scenarios based on <100 employees and 101-4999 employees

    Stop Loss Scenarios

    • Baseline                             Attachment Point ($)             Maximum Cap ($)
      • <100                                75,000                                     2,000,000
      • 101-4999                       125,000                                     2,000,000
    • Lower Risk
      • <100                                20,000                                     2,000,000
      • 101-4999                         50,000                                     2,000,000
    • Higher Risk
      • <100                              125,000                                     1,000,000
      • 101-4999                       300,000                                     1,000,000 
    The cost of stop loss is higher for lower risk and lower for higher risk. This where your risk tolerance level will kick in.

    I have also attached "Self-funded playbook" for employers from Sun Life Financial for your review.

    Hope this helps..

    Jerry Whitaker BA Marketing
    Senior Partner
    Acrisure / Whitaker LaChance
    Portage MI
    (269) 585-7098


    Self Funding.pdf   1.54MB 1 version

  • 4.  RE: Self Funding Health Insurance Programs

    Posted 11-17-2018 10:01
    I think the consultants who have responded make excellent points and can certainly help understand a self-funded plan. From the point of experience, our company had around 40 employees in the ten years or so that we had the self-funded plan. It worked ok, required more administrative work than a standard plan and may have saved us some money. We funded the maximum expense each year, and kept the difference in an accrual fund. However, after 10 years, and a really bad year just as Obamacare kicked in, we exhausted our accrual and our Agent brought us the renewal and simply said, "you're going to switch."

    My conclusion was that it was a lot of work, with a potential pay off, but we only broke even. We have since switched to a standard carrier and everyone is much happier. Our premiums haven't increased (the Agent has to do some work each year!) and our coverage is actually better. It's a lot less administrative work for our HR people (me).

    Timothy Mickunas CPA, CCIFP
    Chief Financial Officer
    D. Wilson Construction Company
    McAllen TX
    (956) 686-9573

  • 5.  RE: Self Funding Health Insurance Programs

    Posted 11-21-2018 07:48
    ​We have been self-funded for 25+ years with few to 60+ employees over that timeframe.  It has worked very well for us with claim expense normally under budget.  We do have a 40k stop-loss to cover any major losses.  We have not had to raise deductibles, withhold amounts, or change benefit options which has gone a long way with employees.  Our bottom line hit for fixed costs is 5%-10%.  Louis Memmolo, GBA, CHRS with Weiner Benefits Group (CFMA-Delaware member) is who put this in place for us many years ago.

    Helen Apostolico
    Principal/Chief Financial Officer
    Landmark Science & Engineering
    Newark DE
    (302) 323-9377

  • 6.  RE: Self Funding Health Insurance Programs

    Posted 11-19-2018 10:04
    We're only in our 3rd year, and are making a lot of changes overall, but have had a great experience so far....  The opportunity to engage employees in attempting to affect rates I believe is a big opportunity.   Rogers and Gray and Roundstone  have been a great education source and partners so far!  Feel free to reach out if you have questions or would like to discuss!

    Michael Bolt
    ENE Systems
    Canton MA
    (781) 828-6770

  • 7.  RE: Self Funding Health Insurance Programs

    Posted 11-20-2018 08:02
    Appreciate the kind words on the agency and our program Michael.

    We would be happy to be a resource to any of our fellow CFMA members regarding captive options for health insurance.  For the right cases they are a great option.  Our agency is actually in the captive as well so we are more than happy to literally put our money where our mouths are as it relates to the topic.  Charles, or anyone else keeping tabs on this thread with questions, shoot me an email,, if anyone is interested in having a discussion and I can put you in touch with the right people at the agency.


    Gregory Deems CRIS
    Senior Vice President
    Rogers & Gray Insurance
    South Dennis MA
    (508) 209-6068

  • 8.  RE: Self Funding Health Insurance Programs

    Posted 11-19-2018 15:41
      |   view attached
    Hello Charles,

    We are in our second year of "self-funding" our health insurance plan through a Captive;  As others have mentioned there is a lot more involved than buying on the "fully-insured" market, but that is to be expected if you're looking to save 30% or more on the total health insurance expense.

    Self-funding Insurance via Captive has been a successful endeavor for us. To date we have saved the "fund" over 30%, and recently we were able to lower the required employee contribution for the first time in years!   We now have a better plan design for our 150-person health plan than Amazon or Microsoft offers, and it is basically the same employee contribution.  My wife is at one of those global giant companies with highly competitive employee benefits, and after comparing the plans we decided to  put our whole family on my company's plan because it offers more coverage for the same employee contribution (price).

    There is a fantastic book I highly recommend for any entrepreneur or finance person interested in Captive funding for employee benefits plans:
    CEO's Guide to Restoring the American Dream, by Dave Chase; "How to Deliver World Class Health Care to Your Employees at Half the Cost."
    (See attached free copy offered by offer in .PDF)   Also check out

    Cheers to those of you who are sick of getting fleeced by the fully-insured market and want to do something about it.   Captive insurance is not a "turn-key" alternative, but with the help of a well-informed insurance broker and a Captive peer group you can become your own health insurance company, provide great benefits for your employees at an affordable rate - yeah like ACA "Affordable."  

    I strongly believe the Captive health insurance route is currently the entrepreneur's best response to out-of-control, unfounded, year-over-year increases in fully-insured premiums.   I have been managing employee health benefit plans as an employer for over 10 years, and I think we have found a great alternative... maybe the best alternative.

    If you would like to speak over the phone, don't hesitate to call.   There are caveats that you need to be aware of and as the person at our company that made it all happen, I can provide value in sharing more about our implementation experience, what "investments" we had to make administratively, and how we go about dealing with the risk.


    Joseph (Joe) Smith
    Chief Financial Officer
    Simpson Unlimited Inc.
    Prince William VA
    (703) 361-0841 x115


    CEOs_Guide_Advance_Copy.pdf   4.25MB 1 version