Self-funded health care insurance plans offer an alternative to traditional health care models. In a self-funding model, the company is responsible for covering all claims in the health care plan and controls any premium reserves. Because these plans are excluded from some requirements of the Affordable Care Act (ACA), employers can save costs related to premium taxes and state insurance regulations.

Key considerations

Self-funded plans can help reduce and manage employee health care costs, while still delivering valuable health care coverage.

  • The employer provides minimum value coverage that meets affordability requirements, but self-insured plans are not required to include some of the ACA benefit reforms.
  • The employer will not need to comply with some of the ACA provisions, such as essential health benefits, insurer tax, medical loss ratios (MLR) and deductible limits.

Employers should be aware of all the ACA compliance requirements, specifically the benefit mandates, and grandfathering if applicable, that directly affect them. And with no annual or lifetime dollar limits on essential health benefits offered by the plan, employers need to consider an appropriate level of stop-loss coverage.

Tax credit availability

  • The employer will not be eligible to receive small-business tax credits.
  • Employees may be eligible to receive health insurance marketplace subsidies if their employer’s coverage does not provide minimum value coverage and/or the employee contribution is more than 9.5 percent of the employee’s household income.

Administration and reporting

Plans are administered and managed by the employer.

Employers will submit required reporting to the Internal Revenue Service starting in 2016. For more information about reporting requirements:

Penalties

Employers with 50 or more full-time equivalent employees may be subject to shared-responsibility penalties if coverage either does not meet affordability or minimum value requirements. Employers must offer coverage to 95 percent of full-time employees and their dependents.

Voluntary insurance

Voluntary insurance can be offered as part of a comprehensive benefits package. These benefits provide peace of mind to employees by helping with out-of-pocket costs associated with illness or injury. Learn more at Aflac.com.

For more information

A comprehensive summary is available in The Benefits Decision Guide.

Learn more at aflac.com/health-care-reform.

To learn more about coverage available in your state, visit: healthcare.gov, cciio.cms.gov and irs.gov.