What is a self-insured group health plan?

Submitted by Anonymous (not verified) on Tue, 08/26/2008 - 11:19

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

Posted: 26 Aug 2008 11:34 Post Subject:

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.

~Jeremy

Posted: 26 Aug 2008 06:06 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.

Posted: 27 Aug 2008 11:40 Post Subject:

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.

Thanks,
Rupert

Posted: 29 Aug 2008 04:28 Post Subject:

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 .

Posted: 29 Aug 2008 07:29 Post Subject:

Hi yeah,

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

Posted: 29 Aug 2008 08:22 Post Subject:

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

Posted: 29 Aug 2008 08:45 Post Subject:

Hi 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

Posted: 29 Aug 2008 01:11 Post Subject:

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

Posted: 29 Aug 2008 02:04 Post Subject:

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

Posted: 30 Aug 2008 06:48 Post Subject:

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

Posted: 30 Aug 2008 06:51 Post Subject:

Hi Fatman,

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

Posted: 30 Aug 2008 06:55 Post Subject:

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

Posted: 30 Aug 2008 07:02 Post Subject:

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!

Evan

Posted: 30 Aug 2008 07:04 Post Subject:

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

Posted: 30 Aug 2008 07:38 Post Subject:

Hi..

The following federal laws would govern the self-insured group health plans-


  • ERISA (Employee Retirement Income Security Act)

  • COBRA (Consolidated Omnibus Budget Reconciliation Act)

  • DEFRA (Deficit Reduction Act)

  • Pregnancy Discrimination Act


I guess there are a couple of them more on the list!
Evan

Posted: 30 Aug 2008 07:47 Post Subject:

I think I've got the list completed this time!

* Civil Rights Act
* Health Insurance Portability and Accountability Act (HIPAA)
* Americans with Disabilities Act (ADA)
* Age Discrimination in Employment Act

Evan

Posted: 30 Aug 2008 08:23 Post Subject:

Hi I guess we should also take the budget reconciliation Acts into account. As far as I remember we do have the following laws that have an unique role to play in it.

(1) Tax equity & fiscal responsibility Act (TEFRA) (2) Deficit Reduction Act (3) Economic Recovery Tax act (ERTA)

Regards, ArindamSenIndies

Posted: 13 Jan 2009 04:28 Post Subject:

This business is cyclical. Companies come and go from being self insured to fully insured. They go fully insured for a few years until the fully insured companies raise their premiums out of whack, then they go back to self insured to save money, then their costs get out of control and they get a deal from a fully insured company, then they raise their rates, so they go back self insured. Its the nature of the game now. Companies are doing everything and anything to save money and be able to supply their employees with benefits.

Posted: 04 Aug 2009 06:28 Post Subject: self-insurance fees

Why are there fees levied on self-insurers in the proposed bill? Does that amount to a penalty for not opting for the government plan? What reason is there for imposing those fees?

Posted: 04 Aug 2009 06:42 Post Subject: self-insurance fees

In the new health care bill before congress, why are fees levied for self-insurers? what is the purpose of these fees? Are they an attempt to discourage self-insuring? Is charging a fee in these circumstances a reasonable thing to do? What do the fees pay for? Does that amount to a penalty for self-insuring?

Posted: 17 Nov 2009 09:35 Post Subject: self insured plans

If an employer "fails" and is closed down and taken over by a bank, what happens to employee claims that have been filed and are pending under his employer's self-insured plans?

Posted: 22 Nov 2009 10:20 Post Subject: Self Insurance

Most self insured plans are set up by very large employers or groups of employers. Sometimes it makes sense for a very large company to self insure. The drawback is an adequate amount of reserves to satisfy state requirements. To Fatman: With self insurance, you are setting yourself up as an insurance company and you need to be prepared to pay out claims, as an insurance company would. One big hit could put you out of business and liable for any underfunded losses, as well as put you below minimum reserves for the state.

Thanks for the great topics and keep the good stuff flowing!

Posted: 22 Apr 2011 12:37 Post Subject: Self insured overrides

Assuming the benefits are there. If a Self Insured plan uses a TPA and the TPA denies autorization for an employee or dependant seeking residential substance abuse treatment, can the employer override that denial and require the TPA to autorize the use of those benefits? if not how does that work?

Posted: 26 Apr 2012 06:30 Post Subject:

Self-insured group health plans are tightly-regulated so you don't have to worry as such plans can provide good health insurance benefits.

Posted: 28 Apr 2012 11:53 Post Subject:

Self-insured group health plans are tightly-regulated


More proof that "medix" has no clue about what he is writing. There are almost no regulations that apply to non-insured self-funded group health plans -- although Obamacare will have some additional impacts. Employers are generally free to cover or not cover whatever they want, although certain things, like maternity care and coverage for women's health issues such as breast cancer are required.

About the only thing that ERISA requires is non-discrimination. Additionally, ERISA prevents most legal action against such plans by participants or beneficiaries. Non-insured self-funded plans are COMPLETELY EXEMPT from state insurance laws which generally MORE TIGHTLY REGULATE the insurance industry.

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