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Funding MechanismsConventionally Insured | Minimum Premium | Self-Funded Conventionally InsuredThe traditional method of providing medical benefits. An employer signs a contract with an insurance company which in turn assumes the responsibility of reimbursing employees and their families for all or a portion of their medical costs. The employer’s primary responsibility is to pay monthly premium. This is also called an indemnity contract. Minimum PremiumA variation on the conventionally insured contract. Benefits are still insured, that is provided by an insurance company, however in order to make the monthly premium more affordable the insurance company only collects the amount of premium necessary to pay for medical claims during the month plus expenses. Self-FundedThe most common vehicle employed by large employers for funding medical benefits. The responsibility for funding benefits is the employer’s, not an insurance company's. Stop loss insurance can be purchased to protect the employer against large claims, however the primary responsibility for funding benefits is still the employer’s.
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