Self-Funding 101: How Paying Your Own Claims Changes Everything #healthinsurance #businessfinance

31 Mar 2026 · 1 min

Watch on YouTube

0:35

In this segment, the speaker explains the fundamental mechanics of a self‑funded employer health plan. Unlike traditional fully‑insured plans where an employer pays a single premium to an insurer, a self‑funded plan requires the employer to cover three distinct costs: (1) administration and network fees, (2) the actual medical claims as they are incurred, and (3) any ancillary expenses. Claims are paid directly by the employer on a per‑claim basis—whether a claim is $50 or $5,000—resulting in separate, often weekly, claim bills in addition to a regular administration bill. This structure shifts the financial risk and cash‑flow timing from the insurer to the employer.

Chapters

So in a nutshell, you as an employer, you are now paying your own claims. You're not relying on the insurance company to pay it for you. So rather than just paying a straight premium to the health insurance company, it's broken apart a little bit differently. You pay administration, you pay for a network, but then you pay your claims. So if a claim comes in for $50, you pay it. If a claim comes in for $5,000, you pay it. So you typically get billed a little bit differently. You get a bill for administration, and then weekly bills for, for claims as they come in.