Self-funding, sometimes referred to as self-insurance, is a way for organizations to plan for low risk benefits like dental and vision care. With Self-funding, organizations pay for actual treatment received by members, rather than a monthly premium. This pay-for-utilization method can result in lower benefit costs for the self-funding organization.

What is an employer self-funded Plan?
A self-funded (self-insured) plan is one in which an organization directly funds the benefit rather than going through a third party.  Under this type of plan, there are no monthly premiums to pay.  Instead, the employer sets money aside for the benefit in a special fund until it is needed for the payment of claims. Under an employer self-funded plan, the financial responsibilities of the plan are taken on by the self-funding organization.

Dental benefit, a good choice for self-funding
Because of their predictable nature, dental benefits can be a very good choice for self-funding. A company’s estimated dental benefit spending can be obtained by reviewing past experience reports (requested from existing insurance provider) or by utilizing our estimation algorithm which is based on actuarial data. Through either method, companies of all sizes can determine whether a self-funded dental plan is the right choice for them.  Often, companies find that they can achieve significant cost savings, or improved benefits by self-funding their dental benefit.

Why are dental benefits predictable?
Unlike health care costs which can be highly unpredictable and costly, dental care costs are fairly predictable and relatively inexpensive.  Three major reasons for this predictability are:

• Non-catastrophic nature of dental care.
• Minimal utilization -Studies show that 40% of all employees with a dental benefit never actually visit the dentist in a plan year. Of the 60% who do utilize their dental benefit, only 5% will hit their annual maximum benefit amount‡.
• Low annual caps and limitations on coverage- Dental plans set an annual maximum benefit anywhere from $500-$2,500 per member and often have restrictions on procedures covered.

The Role of a Third Party Administrator (TPA)
Since most organizations do not have the internal resources or desire to take on the administrative tasks involved in self-funding, a third party administrator (TPA) like SureCircle can be hired to manage the day-to-day tasks of the plan. The role of the TPA can be limited to claim adjudication and payment or can be more extensive and include reporting, obtaining access to provider networks, assisting with compliance issues and other such services. The TPA does not bare any of the financial responsibilities of the plan; they are simply a service provider for the self-funding organization.

† National Association of Dental Plans (NADP).
‡ American Dental Association website