The CFO’s Strategic Brief: 7 Questions on Self-Funding
When CFOs explore self-funding, the questions are big – and entirely fair. Self-funding isn’t about chasing a trend. It’s about shifting from reacting each year to steering the long-term health of your plan.
Below are the questions we hear most often from CFOs who are considering The Switch to self-funding, along with insights from our Employee Benefits team.
1. What happens if we get hit with a bad claims year? How does stop-loss cap our financial risk?
Every CFO worries about the unpredictable year. Stop-loss is designed to cap your exposure, so one large claim or several medium ones do not blow up your budget. Laura Bayless, Consultant, explains, “We set stop-loss levels based on your size, goals, and risk tolerance. In the first year, we take a conservative approach to ensure stability and protection. As we gain deeper insights into your data, we dial in the right balance between risk management and long-term cost efficiency.”
2. How do I know the savings will actually materialize and not just shift uncertainty?
It’s fair to ask whether savings are real or theoretical. Laura explains, “Most people look only at a 12-month cycle, but the hidden risk shows up in month 13 under a fully insured model. Claims will happen either way, but transparency changes how you manage them. You gain insight, the ability to influence trends, and leverage when negotiating renewals. Without transparency, you remain dependent on carrier decisions you cannot see.”
3. What kind of reporting do I get, and how does it go beyond lagging data to predict and prevent high-cost claims?
Traditional reporting tells you what has already happened. Self-funding gives real-time visibility so you can identify patterns early and act before costs escalate. Laura gives this example: “One client faced steep renewals year after year. When they switched to self-funding, the data revealed the real issue: a single member on a $300,000 medication. With that insight we intervened, secured the drug at no cost to the member, and removed the expense from the plan. The result was lower costs and better care.”
4. How are your incentives aligned with mine? Is your compensation tied to controlling costs or just to processing claims?
Too often the system rewards volume instead of outcomes. Your partner should be aligned with your goals: managing costs and strengthening benefits. As Laura says, “The traditional fully insured model is misaligned. When your renewal increases, broker compensation increases. We take a different approach. We charge a simple per-employee per-month fee, aligning our success with your long-term plan performance. As participation grows, lower-risk members enter the pool, strengthening stability and reducing cost over time.”
5. If we have a great claims year, how do we reinvest the savings into our business or richer benefits?
The upside matters. Savings stay with you and many employers reinvest them into their people. Barbra Chambers, Client Executive, provides her POV: “Aligned employers have the desire to not only reduce their costs, but to improve the benefits they offer their employees. When employers see significant savings, we can then help them design more competitive benefits in the form of lower employee premiums, lower deductibles, and increased HSA contributions.”
6. What is the escape hatch? What happens if we need to go back to fully insured?
Thoughtful CFOs plan the exit as well as the entry. Self-funding doesn’t have to be forever. If your business needs change, there are clean paths back. Barbra explains, “If an employer needs to transition out of self-funding, whether due to a sale, acquisition, or internal shift, we guide the move to another model. Contracts are annual, and we ensure runout coverage at implementation, so claims are handled properly. That preparation makes the transition back to fully insured smooth.”
7. What will employees actually experience, and how do we make the transition seamless or even an upgrade?
Employees feel change first, so clarity and stability matter. Barbra says it best: “When done well, employees don’t know the funding model has changed. What they notice are more affordable benefits and clear guidance that helps them use their plan with confidence.”
If you want more clarity and more control, it’s time to take a closer look.
Self-funding becomes worth exploring when renewals feel unpredictable, when you want more influence over cost trends, or when your business is ready for a long-term strategy instead of year-to-year adjustments. If this hits home, it may be time to make The Switch.