Self funding

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Self funding
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Self funding - it is a type of insurance provided by the employer. This means that once the employer decides to provide the employee with private health care, the employees are no longer covered by public health insurance. The performance of the services in question is carried out by third party administrators (TPA's) who process claims on their behalf. The form of this insurance is more popular because of the amount of risk associated with running a business on a given scale. This is precisely the case for companies with more than 250 employees. This is due to the fact that they have appropriately organized human resources units, which are potentially able to handle such transactions

Managing self funding health care

Self funding scheme is particularly popular in European countries. This is due to the fact that most countries do not provide sufficient levels of public care. As a result, very often workers are forced to use private health services (in order to be able to prevent or prevent serious diseases in the first place).

Employers continue to use separate funds to pay the relevant public health insurance money to their employees. Nevertheless, workers who are interested in securing their future adequately are offered the possibility of extending their health package to include private health services [1].

However, the management of this system is complicated. Firstly, employers must implement appropriate procedures to enable them to carry out the activities in question from a perspective:

  • HR;
  • Legal;
  • Tax;
  • Administrative.

The essence of creating separate cells comes down, among other things, to the fact that each person will be specialized in a separate direction, which will enable efficient management of a given system, because it concerns the issue of management of human health protection.

Self funding vs public health care

It should be stressed that in the public health care system, it is assumed that everyone should receive equal access to medical services. However, this process is impossible because it does not take into account inequalities in contributions to specific health contributions. However, the private health system provides that only people who allocate appropriate amounts of money will be able to take advantage of medical services [2].

However, self-funding is not always sufficient. Very often employers specifically encourage employees to use this option in order to provide a smaller range of medical services that will not be covered by public funds (due to their opt-out). For this reason, it is very often recommended that employees carefully analyze the benefits offered by employers. Otherwise, even the most basic medical care may be out of reach [3]. In other words, self funding will not always be a positive solution for them.


  1. Barlow J., Roehrichm J.K., Wright S. 2013, p.146-154
  2. Shiva Kumar A.K., Chen L.C., Choudhury M., Ganju S., Mahajan V., Sinha A., Sen A. 2011, p.668-672
  3. Maynard A. 2013, p.1107-1111


Author: Paulina Wądolna