Posted: Tue Aug 26, 2008 11:19 am Post subject: What is self insured group health plan?
Hi All,
Why should an employer opt for a self insured plan? Can an employer with limited workforce apply for this kind of policy? Would it be beneficial for him?
Denny _________________ Register Now to have your Insurance queries solved.
The self insured group heath plan is an arrangement where the employer and the employees share the risk of health insurance coverage. In this system no insurance company gets involved. Its an arrangement between the employer and the employees, where the employers pay for the out-of-pocket expenses for the medical treatment.
Posted: Tue Aug 26, 2008 6:06 pm Post subject: self insurance
The name is somewhat of a misnomer, in that you are not TOTALLY self-insuring (or at least I hope not). What the employer is doing is taking out a VERY HIGH deductible plan, with an insurance company backing them up. The idea is that the premium saving from this high deductible plan are greater than the additional risk taken on by the increased exposure. _________________ Register Now to have your Insurance queries solved.
The advantage with the self insured health plan is that the employer can customize the policy according to its needs and don't have to accept the policy offered by the insurance company.
The policy of self insurance may not be suitable for all employers. The employer with the financial capacity to absorb huge expenses towards healthcare can only enjoy the benefits of self insurance. This plan, however, may not suit the needs of a small employer with limited financial ability.
Self insured health plans are not usually suitable for an employer with a limited workforce. As Rupert has correctly pointed out ,employers with capacity to absorb expensive claims are more suited for this type of insurance .Because the employer himself is going to pay for the claims and not any insurance company.Self insured plans are more efficient as they are controlled by federal law and not state laws and have very strict regulations.Self insured plans also provide flexibility for employer in terms of insurance as he can adjust to suit the specific needs of the company .
It is a self-funded group health plan wherein the benefits offered to the employees would pass on the risk to their employer. Each claim is reimbursed by the employer out-of-pocket & the employer is not supposed to feed for the premiums as happens in a general health care plan.
Usually a self-insured employer would generate a trust to grasp the money of his employees & other corporates. This fund would be used to reimburse claims at a later date. Regards, Evan
hi all,
Are there any real reasons why the employers would self-fund their health care policies? I mean.. I just wanna know if that's the best option for them? Fatman
There could be a lot of reasons why the employers would do it-
1. The employers would have the authority to define the plan in order to meet the requirements of the total employees-capacity as against obtaining a wholesome general healthcare policy.
2. Developing the health care plan reserves gives the employer an edge to maximize interest income. This income would otherwise be generated by other insurers in terms of premium dollars investment.
3. The cash flow would get enhanced as the employer does not need to feed for the coverage beforehand.
Hope these couple of points would give you an idea of how things fall into place. Evan
Hey guys, to tell you the truth the self-insured health plans are governed by the federal law (ERISA). That is one good reason why you won't ever find an employer going against the state health care benefit rules. The premium taxes associated with state health insurance would constitute 2-3% of the dollar value of the premium. But the employer has no connection with it. It would be solely in the hands of the employer to choose the best insurance provider that meets the needs of his employees. Thanks. Roddick
Hi there..
Should all employers go for self insurance? If they go for it would they be able to safeguard themselves from unforeseen & unmeasurable claims? Would someone please tell me that! Fatman
Hi Fatman...I don't think that should ever be considered as a possibility!
See..I'm sure you'd agree to this fact that all self-insured employers possess the risk to bear the health care claims costs on behalf of their employees. I'd rather say that this obligation can only be met with a free cash flow to which there is no surety at all! Henceforth, I don't see self-insurance as a good option for for such small employers who do not have enough cash flow.
On the other hand I'm not saying that there aren't companies with lower employees strength who do not have self-insured health plans..there may be some but they are the real choosy ones.
Regards, Evan
Let me tell you the basic difference that comes to surface over here-
When I compare the more potential employers with the ones with a lesser potentiality I see that the more powerful ones would have enough fund to support any worth of health care claims. On the other hand the smaller employers would just obtain some kinda stop loss insurance to feed them from losses arising out of claims beyond a certain limit.Such agreements between stop-loss insurers & the employers are not aimed to cover individual plan takers.
Roddick
Hi all..thanx so much for your valued information...but now I'm more keen to know about the administrators of such claims that may arise out of self-insured plans which are actually group health plans.
Regards, Fatman
Yeah...thats a pretty good question I must say Fatty!
See, self-insured employers could do it in two forms-
* They may control the in-house claims
* They may outsource it to third party administrators (TPAs)
Now, these TPAs are people who would assist these employers to develop self-insurance group plans for health purposes & communicate stop-loss coverage, insurance network agreements & production checking services. Hope you got them all!
Hi Evan, over here I'd also like to ask you a couple of questions..
What are the laws to govern such self-insured group health plans?
Again, Who'd look into the payroll deductions under such systems?
Regards, Roddick
