What is a benefit of small firms self-funding health benefits?

Self-funding health benefits allows small firms to take charge of their employee health benefits without relying on traditional fully insured plans. One significant advantage is the potential for lower total costs. By self-funding, businesses can avoid the profit margins that insurance companies include in their premiums, leading to cost savings, especially if the workforce is relatively healthy.

Additionally, self-funding provides the ability to customize benefits based on the specific needs of employees. This flexibility allows small firms to tailor their health plans to better align with the demographics of their workforce, addressing particular health concerns and preferences. This customization can enhance employee satisfaction and potentially lead to better health outcomes.

Collectively, these aspects of self-funding—cost savings and the ability to tailor benefits—underscore why the combined answer of both lower total costs and customization is a strong reason for small firms to pursue self-funding.