Question 1

What vendors does a self-funded health plan need?

Accepted Answer

A self-funded health plan requires at minimum: a TPA (claims administration and network access), a stop-loss carrier (catastrophic risk protection), and a PBM (pharmacy benefit management). Additional vendors commonly used include: specialty pharmacy carve-out, utilization management, disease management, employee assistance program (EAP), telemedicine, direct primary care, and a benefits consultant or broker to manage vendor relationships.

Question 2

How do I compare TPAs for my self-funded plan?

Accepted Answer

Compare TPAs on: claims processing accuracy and speed, network access and discounts, technology platform quality, customer service metrics, ERISA compliance support, stop-loss carrier relationships, and total fee transparency. Request a demo of the member portal and employer reporting tools. Ask for references from employers of similar size. Issue a formal TPA RFP to get competitive bids from 3–5 vendors.

Question 3

How do I compare stop-loss carriers?

Accepted Answer

Evaluate stop-loss carriers on: financial strength (A.M. Best A- or better), claims payment history, laser practices at renewal, contract terms (run-in/run-out, terminal liability), and premium competitiveness. Issue a stop-loss RFP annually or every 2–3 years. Your TPA or stop-loss broker should have relationships with multiple carriers to get competitive quotes. Never rely on a single carrier quote.

Question 4

What is the role of a benefits consultant in a self-funded plan?

Accepted Answer

A benefits consultant (or broker) helps self-funded employers select and manage vendors, negotiate contracts, analyze claims data, benchmark costs against industry data, and stay current on regulatory requirements. For self-funded plans, a consultant with specific self-funding expertise is essential — general insurance brokers often lack the technical knowledge to optimize a self-funded plan. Look for consultants with CEBS, RHU, or similar credentials and self-funding experience.

Question 5

How do I evaluate the total cost of my self-funded vendor stack?

Accepted Answer

Calculate total vendor cost as a percentage of total plan spend: TPA fees (typically 3–6% of claims), stop-loss premium (10–15% of expected claims), PBM fees (included in pharmacy costs), and other vendor fees. Compare against the carrier profit and risk margin embedded in fully insured premiums (typically 15–20%). The vendor stack should cost significantly less than the fully insured alternative, with the difference representing your self-funding savings.

Self-Funded Plan Vendor Comparisons