Many wage earners do not have the cash reserves to survive the onset of
disability. For average workers who live pay check to pay check, disability insurance provides employees
Self-funded plans have several advantages over insured disability plans. One of the main advantages is the
flexibility of the Plan design. By creating an ERISA program, you can design the plan to meet your needs.
Insured plans are state regulated and must conform to standard existing Plan designs. Employers can experience
greater cash flow savings through flexible funding options and control of short-term cash flow.
A self-funded plan also allows employers to earn investment returns on funds set aside to cover annual claims.
Funds spent on insurance premiums usually have no investment return.
Insurance is not risk free -- increased costs are eventually passed on through premium taxes or additional
overhead built into premiums. Administration costs are generally lower in self-funded plans because you pay
actual fees as you go rather than an estimated fee based on the potential duration.
Self-funding benefits employers in many ways:
- Control of Plan design;
- Administration tailored to the employer's needs;
- Cash flow benefits;
- Return on investment for reserves;
- Cost & utilization controls;
- Effective claim processing;
- Lower Cost of Operation;
- Elimination of most premium tax;
- Carrier profit margin & risk charge eliminated;
- Mandatory benefits avoided (State mandates can be avoided as self-funded programs are governed by ERISA); and
- Risk management effectiveness.
Click here to download a copy of the
Disability Claim Form