What is Self-Funding?
Self-funding your business means that you provide the initial funds to start a business through your own personal resources.
Benefits of Self-Funding Your Business
- Self-funding forces you to develop your core entrepreneurial skills.
- Pay as few people as possible in the beginning.
- Maintain outside income.
The bottom line is that many entrepreneurs self-finance their companies, and doing so doesn’t preclude the possibility of raising venture capital or outside funding later. Investors often appreciate seeing a business that’s been grown responsibly.
Self-Funded Health Insurance Explained
Self-funded health care is an insurance arrangement whereby an employer provides health or disability benefits to employees using the company’s own funds, as opposed to fully insured plans where the employer contracts an insurance company to cover the employees and dependents.
Key Points of Self-Funded Health Plans
- Stop-loss policies: Establish a "worst-case scenario" financial cap to compare against fully insured costs.
- Coverage Variability: Benefits vary depending on the policy structure chosen by the employer but typically cover emergency services and preventative care.
- Cash Flow and Tax Benefits: Self-funded plans can offer better cash flow, tax benefits, flexibility, and reduced administration costs.
- Control Over Costs: Businesses gain more control over healthcare expenses and can tailor coverage to their specific needs and budget.