The employer self-funds a fixed percentage (e.g., 90 percent) of the estimated monthly claims, and the insurer covers the remainder. This self-funded approach avoids payment of a premium tax required in most states.
A group health insurance plan that is partially self-funded by the group policyholder but fully administered by another firm, most often an insurance company. Most of the claims received under the group insurance plan are paid using funds that the policyholder has deposited into a special account established for this purpose. Remaining claims are paid by the insurer.
A group health insurance plan that is partially self-insured by the group policyholder but fully administered by an insurance company. The premium is small because the group policyholder pays most of the claims itself. See also administrative services only (ASO) contract and self-insured group.
Combination approach to funding an insurance plan aimed primarily at premium tax savings. The employer self-funds a fixed percentage (e.g., 90 percent) of the estimated monthly claims, and the insurer covers the remainder.