How does monthly funding work?

1. Full Monthly Invoice at the Start of the Month

At the start of each month, the employer is invoiced for the full monthly amount, which includes both:

  • Fixed costs (administration, stop loss, network access, etc.)
  • Variable funding intended to cover expected claims

This creates predictability and avoids mid-month funding surprises.

2. Fixed Costs Are Paid Immediately

Once the invoice is paid:

  • Fixed costs are immediately distributed to the appropriate entities, such as:
    • Self Fund Health
    • The TPA
    • Stop-loss carrier
    • Broker
    • Other plan vendors

These dollars do not sit in reserve—they are paid right away.

3. Remaining Funds Are Held in the Claims Reserve (FBO Account)

The remaining funds are placed into a For Benefit Of (FBO) account. This account is used exclusively to pay claims.

  • Medical and pharmacy claims are paid from this account as they are processed

  • The balance is always visible at

    portal.selffundhealth.com → Claims Fund

  • This balance represents the plan’s available claims reserve

Why Reserve Funds Are Held

Reserve funds exist because Self Fund Health frequently pays for care using cash at the time of service to significantly reduce costs.

Examples include:

  • Paying providers immediately to secure lower negotiated prices
  • Issuing virtual credit cards for procedures, imaging, or surgeries
  • Avoiding delayed payments that could invalidate network discounts

To do any of this, funds must already be available in the account. Paying claims only after they arrive—without a reserve—would remove one of the plan’s most effective cost-control tools.

What Happens If the Reserve Grows Too Large?

If excess funds accumulate in the claims reserve, employers may be eligible to reduce future funding through the flexible funding process.

That process is outlined here:

https://secure.helpscout.net/docs/68c95490aae5c75b7974433b/article/690255c9d038ee064c8223ac/

Key Takeaway

  • The full monthly amount is invoiced up front for predictability.
  • Fixed costs are paid immediately.
  • Remaining funds are held in a claims reserve and used to pay claims as they occur.
  • Reserves enable cash-pay strategies that materially lower healthcare costs.
  • Excess reserves can be addressed through flexible funding.

This structure is intentional and designed to optimize cost control, cash flow stability, and plan performance.