Moving from fully insured to self-funded, step by step.
A switch to self-funding is a project with a timeline, not a rate decision. The steps below are the ones we manage so the first month of the new plan is uneventful.
Before you start.
Begin Months Before Renewal
Underwriting, stop-loss quotes and administrator selection take time. Starting well ahead of the effective date gives room to negotiate and fix gaps.
The Old Plan Does Not Disappear Overnight
Claims incurred under the fully insured plan are the old carrier’s to pay, within its run-out. The new plan pays claims from its effective date.
Data Drives the Quotes
Stop-loss carriers and administrators price from claims history, census and large-claimant detail. Clean data produces better quotes.
You Need a Plan Document
A self-funded plan must be written, with a plan document and a summary plan description that match how the plan actually works.
Employees Should Notice Little
The goal is a transition employees barely feel: familiar network, familiar cards and clear communication about what stays the same.
Decide How Much Risk to Start With
Many employers start at a lower-risk structure, then move toward more risk once the plan has run.
The path from decision to first claim.
The order matters, because later steps depend on earlier ones.
1. Test the Fit
Run the fit analysis and a budget range, then decide whether to proceed.
2. Collect and Clean the Data
Gather claims, census and large-claimant data, and fill gaps with the carrier or prior administrator.
3. Market the Stop-Loss and Administration
Go to market for stop-loss and for an administrator or ASO provider, and compare on terms and not just price.
4. Choose the Structure and Attachments
Select the specific and aggregate levels, the contract basis and the claims funding method.
5. Draft the Plan Documents
Prepare the plan document and summary plan description, then align them with the stop-loss contract.
6. Prepare Operations and Communicate
Set up funding, reporting, COBRA and eligibility, then tell employees what changes and what stays the same.
What we handle.
Manage the Calendar
We build the timeline backward from the effective date and keep every vendor to it.
Run the Market
We obtain and compare the stop-loss and administration proposals and negotiate the contract terms.
Plan the Exit From the Old Plan
We confirm run-out of the old plan and make sure no claims fall between the two contracts.
Three questions to settle.
What Will It Cost in the First Year, in a Good and a Bad Case?
Get an expected cost and a ceiling you can fund, in writing.
What Is the Plan for Claims Under the Old Policy?
Confirm who pays what, and until when, on both sides of the effective date.
What Will Employees Notice?
List the changes, such as cards, claim forms and phone numbers, and prepare answers to them.
Common Questions About Switching
How long does the move take?
Plan on several months from the first analysis to the effective date. Starting later is possible but leaves less room to negotiate.
Will employees keep their network?
Often yes, particularly with an ASO arrangement with a carrier network. We confirm the network before you commit.
Do we need to file anything new?
Possibly. Self-funded plans have ERISA reporting duties and may owe the PCORI fee. We map the duties before the effective date.
What about COBRA?
COBRA continues to apply. The administration responsibility and the rates change with the funding method, so we plan this early.
Can the carrier we are leaving help?
It owes the claims incurred under its policy. We coordinate run-out and data so the transition is clean.
What if we change our mind?
Before the effective date you can stop. After it, returning to fully insured generally happens at a renewal.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
Laws and rules referenced
29 U.S.C. § 1102 — ERISA requires a written plan instrument.
29 C.F.R. § 2520.102-3 — Contents of the summary plan description.
26 U.S.C. § 4375 — PCORI fee on self-insured health plans.
29 U.S.C. § 1161 — COBRA continuation coverage requirements.
This page is general information, not legal, tax or actuarial advice. Rules change and facts matter, so confirm your situation with counsel or a qualified advisor.
An independent employee benefits consulting firm. We look at the entire benefits program: cost, plan performance, risk and administration.
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