Newspaper article Charleston Gazette Mail

Heres a Primer on Self-Insurance ; Companies Can Skip the Middle Man in Covering Medical Bills of Employees

Newspaper article Charleston Gazette Mail

Heres a Primer on Self-Insurance ; Companies Can Skip the Middle Man in Covering Medical Bills of Employees

Article excerpt

Several major health insurers just announced that they expect to raise premiums by up to 40 percent next year. These ever- increasing costs are certainly a drag on the economy. After all, most Americans get their coverage through work. The more employers have to spend on health care, the less they can devote to creating new jobs, investing in new products, or raising wages.

To fight back against rising premiums, more and more businesses are gravitating toward a more cost-effective form of providing health coverage called self-insurance. With this arrangement, a company covers its employees medical bills directly, rather than paying an insurer to do so.

Most Americans are unfamiliar with self-insurance even those who are the beneficiaries of self-funded plans through work or through a labor union. Here are five things everyone should know about it.

Millions of Americans are already self-insured and dont even know it.

Among Americans with health insurance through a private employer, more than 60 percent have self-insured plans. Some of the countrys most prominent companies, including Whole Foods, Microsoft, Starbucks, Home Depot, and Southwest Airlines, self-insure.

Thousands of smaller and medium-sized firms self-insure too. To protect themselves in the event that their employees medical expenses are too high for them to comfortably cover, they can purchase stop-loss insurance. These policies serve as a financial backstops by reimbursing companies for claims that exceed a certain agreed-upon threshold.

Typically, employers contract with an outside administrator or even a traditional insurance company to process their plans claims. So workers may get an insurance card with a conventional insurers name on it. But they may not realize that their employer is actually footing the bill.

Self-insurance plans are more customizable than conventional plans.

Traditional insurers typically offer one-size-fits-all policies that can appeal to vastly different demographics. By contrast, when an employer pays for health care directly, it can tailor its benefits to the specific needs of its workforce.

For instance, a start-up with mostly healthy twenty-something employees can focus its resources that best fits its demographic, such as robust family-planning services. …

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