Employers these days are looking at ways to control health care costs. They hear health care is an important benefit to their employees, but face the task of figuring out how to offer the benefit without exposing themselves to claims that could destroy their bottom lines or even their companies. 

Industry veterans report that over the past decade, more and more small to mid-size employers have turned to self-funding as a way to control costs, offer valuable health care benefits and keep employees productive. 

“It started off slow; it was a new concept. But now that health care costs keep going up, people are looking for alternative ways to finance health care,” says Jim Carlson, president of HCFS of Wisconsin in Pewaukee, Wis. “We've seen more interest than in the past. While they've been out there for a decade, each year it gets more and more attractive.”

As a sign of self-funding's potential, Carlson's company along with its partner, The INC Group, plans to expand to eight to 12 more states in the next year.

The difference

Self-funding differs from fully insured health insurance in a number of ways.