by 
The Curious Bag
-
As a reaction to the rapidly increasing cost of medical care during the 1970s and 1980s, many private sector companies instituted a type of health insurance known as "self-insured" plans.
Identification
A self-insured employer forgoes purchasing insurance from a third-party and instead pays claims out of the company's own funds.
Benefits
Self-insured employers save money on the premiums charged by insurance companies, even when the employee makes no claims. In addition, self-insured companies are not subject to most state laws on health insurance.
Function
In many states, such as Alaska, employers must apply to the local or state government to get approval to implement a self-insured plan. Requirements typically include long-term roots in the community (usually at least five years) and a significant net worth (around $5 million).
Interesting Fact
In 2000, 33 percent, or 50 million, of the 150 million American workers who had a private health insurance plan received coverage through their company's self-insured plan.
Criticism
While self-insured plans save the employer money, states lose money on the taxes and fees charged to a normal health insurance plan--which go to a fund that covers the uninsured or "medically uninsurable." This has some left states without enough money for social health services.
Source:
Self Insurance Institute of America; Self-Insured Group Health Plans
Centers for Disease Control and Prevention; Prevalence of Employer Self-Insured Health Benefits
Alaska Division of Workers Compensation; Self-Insured Employers - Introduction
RELATED QUESTIONS
Copyright 2023, Wired Ivy, LLC